Preamble

The House met at a Quarter before Three of the clock.

The CLERK AT THE TABLE (Sir Courtenay Ilbert) informed the House of the unavoidable absence of Mr. Speaker from this day's Sitting.

Whereupon Mr. WHITLEY, the Chairman of Ways and Means, proceeded to the Table and, after Prayers, took the Chair as DEPUTY-SPEAKER, pursuant to the Standing Order.

PRIVATE BUSINESS.

Private Bills [Lords] (Standing Orders not previously inquired into complied with),—Mr. DEPUTY-SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bills, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, which are applicable thereto, have been complied with, namely:

Beccles Waterworks Bill [Lords].

Hartlepool Corporation Bill [Lords].

Mansfield Railway Bill [Lords].

Ordered, That the Bills be read a second time.

Private Bills (Petition for additional Provision) (Standing Orders not complied with),—Mr. Deputy-Speaker laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the Petition for additional Provision an the following Bill, the Standing Orders have not been complied with, namely:

Manchester Corporation Bill.

Ordered, That the Report be referred to the Select Committee on Standing Orders.

Private Bill Petitions [Lords] (Standing Orders not complied with),—Mr. Deputy-Speaker laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the Petitions for the following Bills,
originating in the Lords, the Standing Orders have not been complied with, namely:

Newcastle-upon-Tyne Corporation (Rates) [Lords].

Shoreham-by-Sea Urban District Council [Lords].

London Electric Railway [Lords].

West Hartlepool Corporation [Lords].

Dover Gas [Lords].

East Ham Corporation [Lords].

Ordered, That the Report be referred to the Select Committee on Standing Orders.

Private Bill Petitions (Standing Orders not complied with),—Mr. DEPUTY-SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the Petitions for the following Bills, the Standing Orders have not been complied with, namely.:—

Bedwellty Urban District Council.

Wallsall Corporation.

Workington Corporation.

Leicester Corporation.

Swinton and Mexborough Gas Board.

Rotherham Corporation.

Ordered, That the Report be referred to the Select Committee on Standing Orders.

Northampton Gas Bill,

Read the third time, and passed.

Lancashire and Yorkshire and London and North Western Railway Companies Bill (by Order),

Second Reading deferred till Wednesday next.

Oral Answers to Questions — INDIA.

RESERVE OF OFFICERS.

Colonel YATE: 1.
asked the Secretary of State for India what steps it is proposed to take to retain the services of the large number of trained officers now in the Indian Reserve of Officers so that they may be available in case of future necessity?

The SECRETARY of STATE for INDIA (Mr. Montagu): The question of the future constitution of the Indian Army Reserve of Officers is now under consideration by the Government of India.

Colonel YATE: Will the right hon. Gentleman consider the question of instituting something like a long service medal to induce members of the Indian Army Reserve to remain on?

Mr. MONTAGU: My hon. and gallant Friend is raising a very important question and I shall be glad to have an opportunity of conferring with him on the subject.

INDUSTRIAL COMMISSION.

Colonel YATE: 2.
asked whether he has received the resolution passed by the Indian section of the Royal Society of Arts on the 13th March last on the subject of the Report of the Indian Industrial Commission, and the necessity of prompt action in the matter; and what steps he proposes to take to give effect to the proposals of the Commission?

Mr. MONTAGU: The answer to the first part of the question is in the affirmative. As regards action, I would refer my hon. and gallant Friend to the reply given on the 13th February to the hon. Baronet the Member for East Nottingham. I expect to receive shortly a dispatch from the Government of India on the subject.

MONTAGU-CHELMSFORD REPORT.

Sir J. D. REES: 3.
asked whether it is proposed to give effect to the increased pensions contemplated in the Montagu-Chelmsford Report before or after the constitutional changes recommended have been carried into effect?

Mr. MONTAGU: The pensionary proposals are independent of those relating to constitutional changes and will be so treated.

Sir J. D. REES: May I assume from that answer that the question will be dealt with at an early date?

Mr. MONTAGU: I am informed that the Government of India are forwarding a dispatch containing their views on this subject.

POLICE PAY.

Colonel YATE: 4.
asked whether, considering that the minimum rate of pay of Rs. 8 or 12s. a month of an Indian police constable still continues in some districts in India, and that the safety and welfare of India depends largely on a loyal and contented police, he will now suggest to the Government of India the advisability of at once considering the question of in-
creasing the pay and allowances of the lower ranks of the provincial police, including inspectors and sergeants, throughout India?

Mr. MONTAGU: The question of the sufficiency of the scale of pay and allowances of the lower ranks of the police in any province is one for the Local Government, and is dealt with in reference to local conditions. My hon. and gallant Friend's question will, I have no doubt, serve the purpose he intends by drawing the attention of Local Governments to the considerations mentioned therein.

Colonel YATE: Will the right hon. Gentleman send a copy of my question to the Government of India and ask them to circulate it to the Provincial Governments?

Mr. MONTAGU: All questions asked in this House referring to India do go out to India.

LOSS OF "HAMPSHIRE."

Mr. BOTTOMLEY: 6.
asked the Secretary to the Admiralty whether, in view of the fact that the inquiry into the loss of the "Hampshire" was of an almost informal character, he will consent to a formal inquiry with a view to relieving public anxiety as to the cirumstances in which Lord Kitchener met his death?

The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): No, Sir. The statements issued to the Press in June, 1916, gave a circumstantial narrative of the loss of this vessel. It is not considered that further inquiry could disclose fresh facts. I think I am entitled to say that my hon. Friend, in the use of the phrase, the "almost informal character," puts a construction upon that phrase not altogether justified after reading the whole of the answer of 1st April, 1919.

Oral Answers to Questions — DEMOBILISATION.

PROVOST-MARSHALS.

Major CHRISTOPHER LOWTHER: 8.
asked the Secretary of State for War how many deputy provost-marshals, assistant provost-marshals, deputy assistant provost-marshals, and other ranks military police are serving with the forces in Great Britain; and how many have been demobilised since 11thNovember?

The SECRETARY of STATE for WAR (Mr. Churchill): With my hon. and gallant Friend's permission I will circulate in the Official Report the detailed figures of the different ranks. The totals for Great Britain and Ireland are:

Officers.
Other Ranks.


Present strength
123
2,445


Number demobilised since 11th November.
45
1,822

The following are the detailed figures:—

—
Great Britain.
Ireland.


Present strength.
Number demobilised since 11th November, 1918.
Present strength.
Number demobilised since 11th November, 1918.


Officers—



Deputy provost-marshals
7
1
1
1


Assistant provost-marshals
52
23
4
—


Deputy assistant provost-marshals
…
…
53
19
6
1


Total of Officers
…
12
43
11
2


Other ranks
…
…
…
2,317
1,727
128
95

TERRITORIAL FORCE (TRAVELLING BOARD).

Lieutenant-Colonel ASSHETON POWNALL: 11.
asked whether the travelling board which is to select commanding officers of the Territorial Force has yet started its work; can he say how long the Board will require to visit the various commands in England and Scotland; and whether the delays which would seem inherent to such a selection Board will lose to the Territorial Force large numbers of men who, if approached in the immediate future, would be willing to re-engage in their old units?

Mr. CHURCHILL: Pending a further meeting of the Council of Territorial Force Associations and their consideration of the problems involved in the reconstruction of the Territorial Force, the Board has not yet commenced work. It is to be remembered that the majority of the Territorial Force Units at present have commanding officers in being. When the Board does commence work, its work will probably be centralised in each Command and representatives from the Command and Associations concerned will probably

be asked to meet the President of the Board at one or more central places. Under these conditions, it is not anticipated that the work of the Board will be protracted.

ARMY NURSES (RAILWAY WARRANTS).

Mr. RENWICK: 13.
asked the Secretary for War whether he is aware that nurses who have been employed during the War

are being discharged with as little as twenty-four hours' notice and without receiving a railway warrant to enable them to reach their homes, find in some cases without a settlement of the bonus which was promised to them; and whether, in consideration of the splendid services performed by them during the War, and the difficulty of finding employment, it can be arranged to give them a month's pay in addition to the bonus in cases where they are demobilised at short notice?

The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): I am not aware of any cases where nurses have been discharged at twenty-four hours' notice or without receiving a railway warrant, but if my hon. Friend will furnish me with details of specific instances I will have inquiry made. Under the existing Regulations all nurses are given a week's notice before demobilisation is carried out, and the whole of the week may be spent on leave. With regard to the gratuity, steps have been taken to accelerate its issue.

Mr. RENWICK: Can the right hon. Gentleman give an assurance that when
nurses are discharged free railway warrants will be given to enable them to return to their homes?

Mr. FORSTER: Yes, certainly. That is the Regulation now, and I am not aware that it is not being carried out.

GERMAN AND AUSTRIAN PRISONERS.

Mr. GILBERT: 14.
asked the Secretary of State for War if he will state the number of German and Austrian military prisoners still detained in this country; how many of them are being employed and in what industries; whether any prisoners of war have been repatriated since the Armistice was signed; and, if so, how many and for what reasons?

Mr. CHURCHILL: There are at present 96,000 German and Austrian military prisoners of war detained in this country. Forty thousand five hundred are engaged in agriculture, forestry, cement production, and quarrying. The difference between the number of prisoners detained and the number employed is accounted for as follows:


In hospital and unfit
9,500


Officers and surplus non-commissioned officers
21,000


Employed in camp duties
3,500


Awaiting embarkation, and on the way to France
10,000


Unemployed
11,500


Since the Armistice, 7,233 prisoners have been repatriated; these include those seriously ill and medical personnel.

Mr. GILBERT: Has anything been done to employ the 11,000 who are now unemployed?

Mr. CHURCHILL: Surely.

TELEPHONE INSTALLATIONS.

Major HENNESSY: 16.
asked the Postmaster-General whether, in view of the number of men at present unemployed in this country, he will favourably consider the advisability of at once carrying out contracts entered into with various ratepayers in the country before the War to instal the telephone in their districts, and more especially at Micheld ever station and Kings worthy, in Hampshire?

The POSTMASTER-GENERAL (Mr. Illingworth): Telephone installations cannot be provided by means of unskilled labour such as that referred to by the hon. Member. As trained staff becomes available every effort is being made to carry out at the earliest possible dates contracts for connections with existing Exchanges, including those in the districts specially mentioned in the question.

POST OFFICE SAVINGS BANK (DEPOSITS).

Mr. GILBERT: 17.
asked what is the present maximum amount allowed for depositors in the Post Office Savings Bank; and whether it is proposed to increase the annual amount a depositor may deposit, in view of the larger amount of war saving certificates one person may now hold?

Mr. ILLINGWORTH: The limits of deposit in the Post Office Savings Bank have been removed for the period of the War and six months thereafter by Section 7 (1) of the War Loan (Supplementary Provisions) Act, 1915.

TEACHERS' SUPERANNUATION BILL.

Sir HENRY CRAIK: 18.
asked the Secretary for Scotland if he can assure the House that in framing any scheme under the Teachers' Superannuation Bill the necessary steps will be taken to secure that none of the conditions in the superannuation scheme for the two countries shall interfere in any way with the free exchange of employment between England and Scotland, andvice versâ?

The SECRETARY for SCOTLAND (Mr. Munro): Provision will be included in the superannuation scheme for teachers in Scotland to secure the object which my right hon. Friend has in mind, so far as service in Scotland is concerned.

Sir H. CRAIK: Will reciprocal arrangements be made between the two countries?

Mr. MUNRO: I am afraid that as the Teachers' Superannuation Bill relates only to Scotland it will be impossible to secure complete reciprocity between the two countries because the statutory conditions are different. If my right hon.
Friend will put down a question to the Minister for Education I have no doubt he will answer it.

Sir H. CRAIK: Is it not possible to introduce legislation to prevent this very serious evil?

Mr. MUNRO: I will discuss the matter with my right hon. Friend.

PARIS-BORDEAUX POSTAL AEROPLANE.

Mr. JOYNSON-HICKS: 19.
asked the Under-Secretary of State to the Air Ministry whether his attention has been called to the burning of the Paris-Bordeaux postal aeroplane on the 7th instant; and whether he will cause experiments to be made with a view to the utilisation of more steel and less inflammable materials in the construction of civilian aircraft?

Mr. PRATT (Lord of the Treasury): I am not aware of the actual cause of the accident referred to, but in the great majority of such cases five is caused primarily by petrol. The substitution of metal for framework and fabric would reduce only slightly the risk of fire or the probability of injury to personnel. Experiments on the lines suggested are actually being made, but till further knowledge is obtained—and this will take some time—I do not anticipate that it will be practicable to employ metal extensively in aircraft construction. The risk of fire from petrol is being reduced in English aeroplanes by various improvements which are being introduced.

CIVIL AVIATION DEPARTMENT?

Mr. JOYNSON-HICKS: 20.
asked the Under-Secretary of State to the Air Ministry whether he can now make a statement as to the staff and work of the Civil Aviation Department?

Mr. PRATT: The provisional staff for the Department of Civil Aviation has been put forward by the Controller-General and his proposals are now being considered by the Re-organisation Committee preparatory to obtaining Treasury sanction for the organisation as a whole.
Meantime provisional Treasury sanction has been obtained for some of the higher posts in the Department and the Controller-General is carrying on with a
nucleus staff lent by the Royal Air Force and composed of officers who have during the War gained the necessary experience in the various directions required.
The work which the Department of Civil Aviation will at present undertake may be broadly divided into four heads, of which I am circulating a full description in the OFFICIAL REPORT, as it is too long for oral answer.

The following is the description referred to in the last paragraph of the foregoing answer:
(i.) For general consideration, co-ordination and planning, including that of air routes both at home and abroad. For examining and advising on the broad aspects of schemes for commercial aviation. The branch will have two main subdivisions; one to deal with questions concerning the United Kingdom and the other with similar matters arising overseas.
(ii.) To obtain, co-ordinate and issue technical and non-technical information of value to the industry and the other branches of the Department through the Controller-General to supply information to the Royal Air Force and all other services concerned. In this branch three sub-divisions are being formed; one to deal with non-technical information; the second with technical subjects, and the third to co-ordinate and issue information of every kind and to deal with publicity generally.
(iii.) The third branch will be known as the "Communications" Branch, and its duties will consist in giving technical advice and assistance to aerial navigation in regard to navigation questions and all forms of signals and communications, including wireless, directional and otherwise, visual signals and land lines. This branch will also be responsible for work in connection with aerial surveys and for the preparation and issue of special maps and charts necessary for aerial nevigation. It will have two main sub-divisions, one to deal with signals in a broad sense, and the other with navigation, charts, maps and survey.
(iv.) The fourth branch will deal with questions relating to the inspection and organisation of all aerodromes used for civil purposes, and with the licensing and registration of aerodromes, aircraft, pilots, and technical personnel employed in civil aviation. It will also carry out the investigation of accidents and their causes and the compilation of technical
151
reports and records relating to this subject. This branch will have three main divisions. The first will deal with the inspection and organisation of aerodromes, and airship and seaplane stations; the second with the licensing and registration of aerodromes, aircraft, and personnel; and the third with accidents.

In addition to these four branches it is proposed that there should be a Meteorological Section directly under the Controller-General. This section would deal with the location and supervision of local meteorological centres and stations, the issue of forecasts, warnings, and upper-air information, and generally with the meteorology of air routes. It would also carry out special investigations into climatic conditions generally, taking care to co-ordinate its operations with any other services concerned. At present the general question of the organisation of the meteorological services is under consideration by the Cabinet, but pending a decision the Controller-General has taken over the meteorological branch which served the Royal Air Force during the War, and the personnel of this branch are being lent provisionally to his Department, which supplies all information required by the Royal Air Force.

RETAIL TRADING

Mr. GILBERT: 28.
asked the Minister of National Service if it is still necessary to obtain a licence in order to open a new retail business; whether it is proposed to continue this restriction on retail trading and for what period of time; and what is the procedure necessary in order to obtain such a retail trading licence?

The MINISTER of LABOUR (Sir R. Horne): I have been asked by my right hon. Friend to reply to this question, as the administration of the Retail Business (Licensing) Order has been transferred to my Department. The answer to the first part of the question is in the affirmative. The Order in question was made for the protection of owners of retail businesses upon service in His Majesty's Forces. As at present advised, I anticipate that it will be necessary to continue the Order for a limited period after the conclusion of peace. Persons desiring to open new retail businesses, or new branches of existing retail businesses, should apply to the nearest Employment Exchange for a form of application for the requisite licence.

CHIEF SECRETARY FOR IRELAND.

The following question stood upon the Order Paper in the name of Mr. EDWARD KELLY:

29. To ask the Chief Secretary for Ireland how many children have been arrested and detained without being charged with any offence since 1st January last; and the names and the period of detention in each case?

Captain REDMOND: On behalf of my hon. Friend I beg to ask question No. 29.

No reply being made,

Captain REDMOND: May I ask the Leader of the House, in view of the absence of any Irish Minister, whether the Government are now in the happy position to be able to state that the office of the anachronism has at last been abolished?

The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Shortt): I understand that my right hon. Friend the Chief Secretary is detained in Ireland and my right hon. and learned Friend the Attorney-General for Ireland will be here to-morrow.

Captain REDMOND: Why is he not here to-day? What is he paid for?

ALLOTMENTS.

Mr. JOYNSON-HICKS: 31.
asked the Prime Minister whether, having regard to the desirability of encouraging allotments in every possible way, he will introduce legislation giving the local authorities somewhat similar powers to those enjoyed during the War to enter unoccupied land and utilise it for allotments until it is required for building?

The PARLIAMENTARY SECRETARY to the BOARD of AGRICULTURE (Sir Arthur Boscawen): I have been asked to answer this question. As I stated in moving the Second Reading of the Land Settlement (Facilities) Bill, Clauses 1 and 2 of that Bill will give to the local authorities the powers which my hon. Friend desires they should possess.

CONSULAR SERVICE.

Lieutenant-Colonel ASSHETON POWNALL: 32.
asked the Prime Minister whether he can publish the Report on the reorganisation of the Consular Service?

Mr. SHORTT: The Report has not yet been considered by the Government. If my hon. and gallant Friend will repeat his question in a fortnight, I hope to be in a position to reply to it.

GERMAN MUNITION FACTORIES (BRITISH MANUFACTURERS).

Sir KINGSLEY WOOD: 34.
asked the President of the Board of Trade in what way certain representatives of British chemical manufacturers, who were permitted to inspect German munition factories in the occupied area, some three months ago, were chosen; why a really representative body of British chemical manufacturers has not had an opportunity of inspecting these factories, as was done by French and American manufacturers, and is he aware of the serious handicap to British chemical industry which this delay is causing?

Sir A. STEEL-MAITLAND (Department of Overseas Trade): The Ministry of Munitions arranged to send over at intervals representatives of various British Industries. In all, four missions were to be sent in connection with the industries which have been under the control of that Department during the War. One of these was a Chemical Mission. This has already returned and reported with regard to poison gas manufacture, and has yet to furnish reports on other matters. It was felt, however, that a commission representing chemical manufacturers should also be sent, with the object of studying German chemical manufactures from a commercial point of view, and arrangements for this were undertaken by the Department of Overseas Trade.
Some delay has arisen from the fact that the military authorities stated that it was difficult to make arrangements for parties of more than six or eight at a time, while the Chemical Manufacturers' Association urged that the group of industries concerned could not be adequately represented by a party of less than twenty.
A reply has now, however, been received from the Governor of Cologne that a commission not exceeding twenty members can be received at an early date, provided that not less than seven days' notice is given. The Chemical Manufacturers' Association has been advised accordingly,
and arrangements are now being made, and the military authorities are anxious to co-operate in every way in their power.

Mr. JOHN JONES: Will the hon. Gentleman arrange for labour to be adequately represented, seeing that labour is as much interested as the manufacturers?

Sir A. STEEL-MAITLAND: Perhaps the hon. Gentleman will ask those directly concerned to get into communication with me on the subject.

LOCAL GOVERNMENT FRANCHISE (DEMOBILISED SOLDIERS).

Captain TERRELL: 36.
asked the Prime Minister whether many soldiers demobilised from the Army are very disappointed that, while they possess the Parliamentary vote, they are not qualified to vote in Local Government Board elections; and whether he will introduce legislation to give these men the local government franchise?

The PARLIAMENTARY SECRETARY to the LOCAL GOVERNMENT BOARD (Major Astor): I have been asked to reply to the question of the hon. and gallant Member. I am aware that some of the demobilised men were not qualified for the first register of Local Government electors, but a certain number of these will be able to qualify for the second register, which comes into force on 15th May, and that a further number will be able to do so for the third register. The difficulty in these cases is therefore only temporary, and my right hon. Friend does not think that legislation is necessary.

CHARITABLE FUNDS (REGISTRATION).

Mr. GILBERT: 37.
asked the Prime Minister whether, as the registration of war charities gave satisfaction and security to the public by informing them which werebonâ fidefunds or societies, he will consider as to compelling all charitable funds which depend on appeals to the public to be registered in the future in like manner to those of war charities?

Mr. SHORTT: I will consider the question, but legislation would be required to give effect to the hon. Member's proposal.

STATE INSURANCE

Mr. BOTTOMLEY: 38.
asked the Prime Minister whether, in view of the profits made by the Government as the result of its various insurance schemes during the War, he will consider the desirability of the State taking over insurance generally and particularly that relating to the industrial classes?

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. Bridge man): The Prime Minister has asked me to reply to this question. The State, by its schemes of health insurance and unemployment insurance, fulfils already an important part in the sphere of insurance, particularly as it affects the industrial classes. I am not in a position to say whether or not it may prove desirable to extend such schemes of State insurance, but the Government have certainly not considered the policy of making the whole business of insurance in this country a State monopoly.

Mr. PEMBERTON BILLING: Having regard to the fact that the health and life of the people are the greatest assets of the country, would it not be advisable for the Government to consider taking over at least child insurance?

Mr. BRIDGEMAN: The question should be addressed to the Prime Minister.

FOREIGN SECURITIES.

Lieutenant-Colonel Sir NORTON GRIFFITHS: 40.
asked the Chancellor of the Exchequer what is the correct value of securities in respect of property of all kinds in other countries which have been sold or pledged by the Treasury during the War for the purpose of financing imports and maintaining rates of exchange?

Mr. BALDWIN (Joint Financial Secretary to the Treasury): The nominal value of securities bought for the purpose of maintaining foreign exchange is approximately £223,390,000, and the nominal value of securities deposited under the Treasury schemes is approximately £404,000,000. It has not been necessary to use all these securities.

GERMAN GLOVE FABRICS (PROHIBITED IMPORTS).

Sir J. D. REES: 41.
asked the Chancellor of the Exchequer whether he has
decided under what conditions, if at all, the importation of glove fabrics from Germany shall be continued?

Mr. BRIDGEMAN: The importation of goods from Germany is at present prohibited under the trading with the enemy legislation. There is no exception in favour of glove fabrics.

Sir J. D. REES: Will my hon. Friend see that this prohibition is continued?

COAL-MINING INDUSTRY.

Major NEWMAN: 43.
asked the Chancellor of the Exchequer whether he can give the total amount of the deficit on the working of the coal-mining industry which will have to be borne in the current year by the taxpayer, due to the increase of wages and decrease of working hours, as recommended in the Interim Report on the Coal Industry Commission Act, and signed by Mr. Justice Sankey and a section of the Commission?

Mr. BRIDGEMAN: My right hon. Friend has asked me to answer this question. In the Report of Mr. Justice Sankey and three of his colleagues on the Coal Industry Commission, the deficit to be made good by the taxpayer in the calendar year 1919 is put at £13,000,000. The whole of this will fall into the nine months ending 31st December, 1919, and a further sum of £6,500,000 would be required for the first quarter of 1920, making a total for the fiscal year 1919–20 of £19,500,000.

CIVIL SERVICE PENSION (WALLACE C. LABARTE).

Mr. L.LYLE: 24.
asked the Secretary to the Treasury whether he will take into sympathetic consideration the case of Wallace C. Labarte, who, after serving nearly forty years in the Inland Revenue and in the Customs and Excise, was retired owing to ill-health on 29thJanuary, 1919, and who has now been awarded a pension the present value of which is about 13s.; whether this man is excluded from any benefit of the new pension bonus system; and whether, as the whole of his conduct was satisfactory and his health gave way largely under the strain of extra war work, his services can be more adequately recognised?

Mr. BALDWIN: Labarte, a warehouseman, was away sick from August, 1915, and was retired in January, 1916 (not 1919 as stated in the question) at the age of fifty-two on the ground of ill-health. He was awarded a pension of £68 7s. 7d. per annum together with an additional allowance of £209 13s. 10d. under the Superannuation Act, 1909, these being the maximum amounts to which his service entitled him. His ill-health began some years before the War, and was not due to it. A s he was never in receipt of war bonus he is not eligible to receive the increase of pension allowed to men who have received war bonus, under the conditions described in the answer given by my right hon. Friend the Chancellor of the Exchequer in reply to a question put by the hon. Member for the Devonport Division on the 16th instant.

Oral Answers to Questions — FOOD SUPPLIES.

MEAT.

Mr. L. LYLE: 26.
asked the Food Controller the price at which the Imperial Government sells Overseas Dominions meat to the Allies; and what is the price of the same type of meat when sold in this country to the British public?

The PARLIAMENTARY SECRETARY to the MINISTRY of FOOD (Mr. McCurdy): Frozen meat from Australia and Mew Zealand is supplied by the Board of Trade to the Allied Forces in Salonika and the East and is charged against the several Governments at landed cost according to the respective quantities consumed by their troops. The meat so supplied consists almost entirely of beef, and I have no information as to the prices actually charged for it by the Board of Trade. The meat from Australia and New Zealand sold by the Food Controller on British markets is mainly lamb with a small proportion of mutton, and the prices paid by the British consumer will be found in the Meat (Retail Prices) Order, a copy of which I am sending to the hon. Member.

RUSSIA.

Mr. LYLE: 33.
asked the Prime Minister if he can now make a statement as to the general military position and to the political position in European and Asiatic Russia?

Mr. SHORTT: I can add nothing to the Prime Minister's statement on the 16th of April last.

ADMIRAL JERRAM'S REPORT

Mr. PENNEFATHER (by Private Notice): asked the First Lord of the Admiralty the cause of the delay in the announcement of the Admiralty proposals with regard to the pay of the Navy?

The FIRST LORD of the ADMIRALTY (Mr. Long): The whole question is now before the Cabinet, and I confidently hope to be in a position to make an announcement next week.

Sir C. KINLOCH-COOKE: When will the Report of Admiral Jerram's Committee be published?

Mr. LONG: We do not propose to publish the Report, but only the conclusions of the Government on it.

Sir C. KINLOCH-COOKE: Is the right hon. Gentleman aware of the great dissatisfaction in the Navy with regard to the non-publication of the Report?

Mr. LONG: No, Sir; and I do not see how there can be dissatisfaction when no announcement has been made.

Oral Answers to Questions — NOTICES OF MOTION:

HONOURS AND SECRET FUNDS.

Brigadier-General CROFT: To call attention, on Wednesday, 28th May, to the question of Secret Funds for the bestowal of Honours, and to move a Resolution.

ORGANISATION OF EMPIRE.

Brigadier-General COCKERILL: To call attention, on Wednesday, 28th May, to the need for the organisation of the Empire, and to move a Resolution.

PRIVATELY-OWNED COAL WAGONS.

Mr. TICKLER: To call attention to the taking over of privately-owned coal wagons by the Railway Executive, and to move a Resolution.

Oral Answers to Questions — SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE A.

Sir SAMUEL ROBERTS reported from the Committee of Selection; That they had
discharged the following Members from Standing Committee A: Major Barnett and Mr. Thomas-Stanford; and had appointed in substitution: Mr. Lorden and Sir William Davison.

Report to lie upon the Table.

BILL PRESENTED.

WAGES (TEMPORARY REGULATION) EXTENSION BILL,—"to extend the operation of the Wages (Temporary Regulation) Act, 1918, for a further period of six months," presented by Sir ROBERT HORNE; supported by Mr. Wardle and the Lord Advocate; to be read a second time To-morrow, and to be printed. [Bill 68.]

BUSINESS OF THE HOUSE.

Ordered,
That the Proceedings of the Committee of Ways and Means have precedence this day of Notices of Motion and be exempted from the provision of the Standing Order (Sittings of the House)."—[Mr. Chamberlain.]

Mr. HOGGE: May I ask the Chancellor of the Exchequer if he will say for the convenience of the House whether the usual course will be followed with regard to the Budget Resolutions, and if certain Resolutions will be left over so that we may begin the discussion to-morrow?

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): Yes, I hope the Committee will give me the bulk of the Resolutions to-night in accordance with the ordinary practice, and I will hold over until to-morrow the general Resolution for amendment of the law which will enable the general discussion to be taken to-morrow on any point raised by the Budget.

Orders of the Day — WAYS AND MEANS.

Considered in Committee.

[Mr. WHITLEY in the Chair.]

Orders of the Day — FINANCIAL STATEMENT.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): It is fifteen years since I first held the office which I occupy to-day. I did not seek it then, and I accepted it on the present occasion with diffidence and with reluctance. It is never an office which, to my mind, is easy. It is always one of considerable difficulty, and the difficulties of to-day are more than ordinary. When I consulted my right hon. Friend and predecessor (Mr. Bonar Law), whose support to-day I am sorry not to have, owing to his engagement elsewhere, he, with his habitual cheery optimism, told me that he thought the position was more difficult at that moment than at any time during the War. I think there is some truth in the statement. We all know what has happened since the signature of the Armistice. There has been a détente in men's minds. In the military sphere armies which would have fought on without a murmur, if that had been necessary, for another year in order to secure victory, began to grumble at being retained with the Colours, and to call for immediate demobilisation, and the same thing has occurred in the civil sphere and in the financial sphere. People who during the War strove their utmost to save and to place their savings at the disposal of the Government are less willing to make those sacrifices now, and less willing, if they do save, to give the State the first call upon their savings. People during the War accepted the immense burdens of war without grumbling, and the House of Commons passed them with the minimum of criticism. But both the House and the people are in a different mood to-day, and I am called upon at one and the same time to remit or to repeal the taxation which was imposed and to remedy all the grievances which have been cheerfully endured in these years of stress and strain, and, not merely to resume the civil expenditure which was interrupted under the stress of war, but to provide the means for creating within a few months or a few years a new heaven and a new earth; and the same people who call upon me for fresh and
large expenditure in every special field expect me at the same time to accomplish vast reductions in expenditure. I can work no such marvel, and unless I can have not merely the good will, but the assistance, of Parliament, the task which confronts me is one which no man can complete.

Orders of the Day — EXPENDITURE 1918–19.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): With these few preliminary observations on a subject to which I must, I think, return in the course of my speech, I turn at once to the expenditure of last year. By a happy custom now formally adopted, the figures are already in the hands of Members, and I need trouble them with but very few. The expenditure—Exchequer issues—for the year which has just been completed was less than the estimate of £2,972,000,000 by £393,000,000. The estimate of daily average expenditure was £8,143,000, and the actual expenditure was £7,067,000. I think it would be of interest to the Committee to divide the year into the period before the Armistice and the period since the Armistice was signed, and to see what the average expenditure was in each of those two periods. In the earlier period, from the 1st April to the 9th November, it was £7,443,000; in the latter period, from the 10th November to the 31st March, it was £6,476,000—that is, a reduction of £1,667,000 per day on the Budget Estimate, or, in other words, a reduction of 20 per cent. Let me add that that reduction would have been still greater but for special expenditure consequent on and the result of demobilisation. For instance, £52,000,000 was spent on gratuities to members of the forces who were demobilised; and unemployment, a charge arising out of demobilisation, has cost £13,000,000. There has been a saving on the year in the Debt Charge compared with the estimate of £45,000,000.

Orders of the Day — REVENUE 1918–19.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): If I turn from the expenditure side of the account to the Revenue side, the estimate was for £842,000,000—I give the figures in round numbers. The actual receipts were £889,000,000, in other words, the receipts exceeded the estimate by £47,000,000. There is an increase under Inland Revenue on every important head of duty except three. Income Tax and Super-tax realised just about £750,000 more than the estimate—a very remarkable approximation, I think, on a total of £291,000,000. The Death Duties failed to reach the estimate by £1,200,000, but that
was one of those accidents and nothing more than one of those accidents to which we shall always be subject as long as a considerable portion of the Death Duties is derived from very large estates, because those large estates are not sufficient in number to give us a stable annual average. I may add that in this case, had the year closed a week later, the payment of duties on two estates would have brought up the receipts to the amount of the estimate. Excess Profits Duty showed a larger deficiency below the estimate. It was down £15,000,000, but that indicates no loss of Revenue except for the year. What was not paid last year will be paid this year.
I will say a few words about Stamps. My recollection of Stamps is of an uncertain Revenue that was apt to disappoint the Chancellor of the Exchequer. In the year which has closed they have done remarkably well. Even apart from the new Cheque Duty they have beaten all previous records. The total yield was nearly £12,500,000, representing an excess of more than £3,000,000 over the estimate, and of £4,000,000 over the receipts for the preceding year. The produce of the increased Cheque Duty—I wish my right hon. Friend the Leader of the House were here to listen to me—has been more than double the estimate of £750,000, a result which is due, in part, to the bankers having sent in for embossment with the additional stamp larger stocks than were anticipated, and in part to the fact that the imposition of the tax would seem hardly to have restricted the use of cheques at all. The Duties on Conveyances exceeded by nearly £1,000,000 the receipts in the preceding year, due to the large number of sales of property that have taken place. Transfers on stocks and shares account for a further £400,000 of the increase, and the yield of the Companies Capital Duty has risen by over £500,000.
Customs and Excise have also done well. They show a surplus over the estimate of £14,520,000. It may be interesting to the Committee to know some of the articles which contributed to that surplus. Tobacco was up £5,750,000, spirits were up £3,000,000, tea showed an excess over the estimate of over £2,000,000, and the Entertainment Tax contributed £1,500,000. Beer showed a small deficit compared with the estimate.
Of the other items on the Revenue side I need only mention, the Miscellaneous
Revenue, which contributes £37,000,000 out of a total excess of £47,000,000. I mention this because the item has given rise, I think, to a good deal of misapprehension. The excess was composed as to £33,000,000 of a contribution from India on account of the £100,000,000 of Five per Cent. War Loan for which she undertook to be responsible. I hope that the fact that I am ex-Secretary of State for India will not be held to debar me from expressing the gratitude of the Committee and the country to the people of India for the contribution which they have made in the financial as well as in the military sphere to the exertions which the Empire has been called upon to make during the last few years, and from expressing the hope that the loyal masses of Indians may soon recover from the sufferings which they are now enduring, whether they arise from the forces of nature or the destructive enterprise of man. A further sum of £2,500,000 represents additional Grants from the Colonies, making £4,500,000 in all. £1,500,000 was due to extra profits of the Mint, chiefly arising from the large demand for silver coinage. I think that is all I need say about the Revenue and Expenditure of the past year.

Orders of the Day — BALANCE SHEET 1918–19.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): If we now compare the two sides of the account, we find that the Exchequer Issues were £2,579,301,000. The Revenue was £880,021,000, leaving a deficiency to be made good by borrowing of £1,690,280,000 cash, or nearly £440,000,000 less than was anticipated a year ago. I think it will interest hon. Members to know the percentage of expenditure which has been derived from borrowing and from taxation. Of the total expenditure in 1918–19, 34.47 per cent. was provided by Revenue, while 65.53 per cent. was provided by borrowing. If we take the figures for the five years from the 1st April, 1914, to 31st March, 1919, the proportions are 28.49 per cent. from Revenue and 71.51 per cent. by borrowing. That is a record which I believe no other belligerent can equal, and the sacrifices which it indicates place us in a good position to face our future difficulties.
The borrowing to meet the deficiency on the year of £1,690,280,000 has been under the following main heads: National War Bonds £986,000,000, War Savings Certificates £89,000,000, Other Debt £400,000,000, of which £325,000,000 were advanced by the American Government and the rest
derived from various other loans abroad. The balance has been provided mainly by the Floating Debt. I should add that these figures are given net and represent the face value, excluding premiums, of the securities issued, except in the case of War Savings Certificates, the figure for which is taken at the cash receipt of 15s. 6d. per certificate.

Orders of the Day — NATIONAL DEBT.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): This brings me to the amount of the National Debt. The National Debt proper, that is exclusive of what we call Other Capital Liabilities, was at the outbreak of the War approximately £645,000,000. On the 31st March of last year the total was in round figures £5,872,000,000, and on the 31st March this year the total was £7,435,000,000, as against the estimate a year ago of £7,980,000,000. Of the Capital Debt incurred, internal debt accounts for approximately £6,085,000,000 and external debt for approximately £1,350,000,000. A considerable part of the debt is represented by National War Bonds repayable at a premium, and the premiums on those Bonds represent a further liability of £51,716,000. Further, the War Savings Certificates are allowed for at 15s. 6d. each and if they are all held for five years they will be repayable at a £1, which would then involve an additional obligation of £65,000,000. Finally, our Foreign Debt is largely repayable in foreign currency, and the sterling equivalent of the debt must necessarily vary according to the state of the exchanges at the time when repayment becomes due.

Orders of the Day — NATIONAL ASSETS.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): Against this large total we hold certain assets. First there are the obligations of our Allies and Dominions, amounting on the 31st March of this year to £1,739,000,000. Of that sum £171,000,000 were due by the Dominions and £1,568,000,000 by our Allies. I think the Committee will desire to know how that sum was distributed.



£


Russia owes
568,103,000


France
434,490,000


Italy
412,520,000


Belgium
86,779,000


Serbia
18,643,000


And other Allies
47,915,000


Next to this debt from the Dominions and Allies there is the remaining liability of India in respect of the 5 per cent. War Loan, which amounts to about £30,000,000.
There are also assets of a substantial character acquired out of Votes of Credit and now no longer required which will be disposed of as opportunity offers. I shall return to that subject later. Finally, there are the payments that we shall receive in respect of indemnity from our enemies. But when every proper allowance is made for these assets, the amount and value of which, as well as the date at which we may expect to receive payment for them, is necessarily uncertain, the burden of debt left to us is still very formidable.
Before I pass from this subject I should like to remind the House that, in accordance with the proposal outlined by my predecessor in the Budget Speech last year, a set-off has been arranged between the Canadian Government and the British Government in respect of our liability to them and their sterling obligation to this country. The effect of this transaction, as explained in the Treasury Minute of 14th November, 1918, presented to Parliament at the beginning of the Session (Command Paper No. 9234) was, on the one hand, to reduce the debt of Canada to this country, and, on the other, the debt of this country to Canada, by a sum of £80,680,000. I am not without hope that we shall carry through a similar transaction in the course of the current year.

Orders of the Day — EXPENDITURE, 1919–20.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): I come now to the current year. I do not propose to enter into any details of the expenditure of the year. The Estimates have been presented and there are more fitting opportunities to discuss the matter, but there are one or two observations I should like to make about them. In the first place, large as the Estimates are, they are less than 50 per cent. of the Estimates of last year, and well under 50 per cent. of what would have had to be provided if the War were still going on, and what, under such circumstances, we should have provided without complaint, and I think with very little difficulty.
Secondly, the Estimates are not Estimates for a normal year. The year is wholly abnormal. The Estimates for the fighting Services are admittedly so. My right hon. Friend the Secretary of State for War could not contemplate normal Army Estimates of £440,000,000 gross and £287,000,000 nett. So, too, with the Civil Service. A great deal of criticism was aroused by the presentation of such large Civil Estimates, but, as my hon. Friend the Secretary to the Treasury has already
explained, the comparison which was made with the Estimates of last year was wholly misleading. For in this year we are dispensing with Votes of Credit. The increase therefore as compared with last year is apparent only, and due to the provision in the ordinary Votes for charges which have hitherto been borne in Votes of Credit. Moreover, a very large part of these Estimates, approximately £275,000,000 out of a total sum of £495,000,000, is due to expenditure on temporary charges arising out of the War. I think the Committee was of opinion that it was right that Votes of Credit should be terminated at the earliest possible moment, and responding to that view, freely expressed in the last Parliament, and to the undertaking of my predecessor that it should be done, if it were possible, we have formulated ordinary Estimates instead of Votes of Credit in the current year. But I am sure that the Committee will recognise the extraordinary difficulty of estimating under such circumstances as the present, and will not expect from us, or hold us to, that accuracy which it is the pride both of the spending and other Departments to achieve in normal years. Already I have to make additions to the Estimates which have been presented which will not surprise Members who have followed what has been happening. Since the Estimates were published it has been necessary to assume new obligations for loans to our Allies to the amount of £28,000,000. There are liabilities of £20,000,000, as explained by my hon. Friend the Parliamentary Secretary to the Board of Trade to-day, in respect of coal. Further, unemployment benefit has been extended for a further period, though at reduced rates, and I have to provide £8,000,000 additional for that purpose. Then, I have to provide out of the Consolidated Fund capital for Loan expenditure under the Land Settlement Bill, and I estimate it for the current year at £5,000,000. Finally, there is an additional Civil Service war bonus, under the recent award of the Arbitration Board, which may cost us another £4,000,000 in the course of the year. I must, therefore, allow in my calculation for an excess of at least £65,000,000 on the Estimates as at present presented.
The only other item of expenditure with which I need deal is the Debt Charge. I put this at £360,000,000, of which £29,800,000 will be required for services within the Fixed Debt Charge, and the
balance of £330,200,000 for services outside that Charge, including the new borrowing to be effected during the year. Under present circumstances, and so long as borrowing must continue, I cannot make provision for a Sinking Fund. The total expenditure for the current year, after allowing for the additional expenditure which I have just described, will be £1,434,910,000.

Orders of the Day — REVENUE 1919–20.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): What revenue have we got to set against that? On the existing basis of taxation, we expect to collect during the coming year a revenue of £1,159,650,000, an increase, without any alteration in taxation, of £270,629,000 over the actual receipts of last year. Details will be given in the White Paper, which will be in the hands of Members of the House, I hope, almost immediately after my statement is finished. I need only remark here that it includes a sum of £300,000,000 on account of Excess Profits Duty, and of £210,000,000 for miscellaneous revenue, of which £200,000,000 are receipts from the realisation of Vote of Credit assets. The sum taken on account of Excess Profits Duty may be counted upon whatever be the decision of the House in respect of that Duty. It represents tax due for accounting periods already closed, or already running out, and even if the tax were brought to an end as rapidly as possible, there would remain to be paid £300,000,000 in the current year, and I anticipate £100,000,000 in the year after. As regards the £200,000,000 which I have taken as the probable receipts from Vote of Credit assets this year, this figure, of course, does not represent the total amount of these assets, nor even the total amount expected to be realised in the present year. It is the amount of cash which we hope will be paid into the Exchequer, over and above the very considerable amounts from the same source which are appropriated in aid of Votes. I will give the figures of the Appropriations in Aid:


In aid of the Ministry of Munitions
£140,000,000


In aid of the Ministry of Shipping
£50,000,000


Of the War Office
£50,000,000


Of the Admiralty
£14,000,000


Together
£254,000,000


Making with
£200,000,000


which I expect to receive into the Exchequer, a total for the year of
£454,000,000


Even that does not exhaust the amount of the credit which we expect to realise. I put the total value of these assets outstanding on March 31st last at approximately £800,000,000. There will, therefore, be a further sum to come in in future years. The £200,000,000 estimated for this year is necessarily a provisional figure. It is extremely difficult to form any good estimate either of the time at which these assets can be realised or the prices which they will fetch. All I need say at the moment is that I am advised that it is a safe estimate.

Orders of the Day — BALANCE SHEET 1919–20 ON EXISTING BASIS.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): Resuming what I have said, the position for 1919–20 would thus be as follows:—
Expenditure, £1,434,910,000.
Revenue, £1,159,650,000.
Deficit, £275,260,000.
That is a lesser deficit, I think, than most people have anticipated. We are left, therefore, with a deficit of £275,000,000 for the current year, or, as I would prefer to call it, £300,000,000, in order to allow for contingencies and further demands, some of which I can already see maturing. That, therefore, is, I hope, the maximum figure which, on balance, we shall need to have borrowed at the end of the year. It may be reduced by any sums which we receive, if we receive such in the course of the year, on account of repayment of capital or payment of interest by our Allies on their loans or in the shape of indemnities from the enemy countries, and, of course, it would be reduced to the extent of any increase of new taxation in the current year.

Orders of the Day — BORROWING 1919–20.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): That is not an unmanageable figure, but I beg the Committee not to think for a moment that it is any measure of the effort that is required of us. In the first place, the early months of the year are, from the revenue point of view, always lean months, and we have to borrow in anticipation of the revenue coming in. In the second place, a large part of our debt—no less than £957,000,000—is in the form of Treasury Bills, and, for the most part, of three-monthly bills, which therefore fall due for repayment every quarter. In other words, we have to borrow that sum of money four times over in the course of the year. During the War these bills were largely used by the public as a means for the
temporary investment of funds intended, on the cessation of the War, to be employed in industry and commerce, and, as they are withdrawn for that purpose, the difficulty of borrowing to replace them will be no less great than the difficulty of new borrowing. It will, in fact, be new borrowing. We have, in addition, maturing in the current year Ways and Means advances of £455,000,000; Exchequer Bonds, £245,000,000 (including in this figure, £66,000,000, of 1922 bonds which have an option of redemption on 1st October), and £96,000,000 of Foreign Debt—together, £796,000,000; making, with the Treasury Bills, a total of £1,753,000,000.
The Floating Debt on the 31st March this year amounted, in round figures, to £1,412,000,000, namely £957,000,000 of Treasury bills, and £455,000,000 for Ways and means advances—an increase in the year 1918–19 of £223,584,000. This sum is less than the amount outstanding at the half-year ending 30th September, 1918, and much less than the maximum of £1,550,000,000 which was reached on the 31st of December, 1918. The drop is, of course, in part due to the collection of revenue but it is mainly owing to the large subscriptions in War Bonds in January last as a result of the special effort and special campaign then taken in hand, which brought the floating debt down to £1,380,000,000. This is not the time, nor am Ito-day in a position, to make proposals to the House for dealing with this large floating debt, but I can assure hon. Members that it is a subject which occupies my grave attention.

Orders of the Day — THE CURRENCY AND INFLATION.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): Another question closely connected with the floating debt is the continued expansion of the Currency Note issue. On 1st April, 1918, the amount of notes outstanding was £228,000,000. This figure had increased by the date of the Armistice to £291,000,000. On 31st March of this year it stood at £328,000,000 and on 23rd April it had risen to £349,000,000. The gold reserve remains stationary at £28,500,000, the balance being covered by Government securities. The Bank of England note issue has increased since 1st April, 1918, by £23,000,000. The aggregate amount of legal tender in the country, which is estimated to have amounted at the beginning of the War to about £214,000,000, is now more than £540,000,000. It is obvious that that expansion cannot be allowed to continue
indefinitely. But the remedy is not so simple as at first sight it seems. It must be remembered that never at any period during the War, or since, has there been anything in the nature of a forced issue. Currency notes have only been issued in response to the public demand for currency. If there were anything like a forced issue it could be stopped to-day, not only without disadvantage but with positive advantage to all concerned. But what would be the effect of such action under present circumstances? The refusal of the Treasury to issue any more currency notes would not lessen the demand of the manufacturer on his banker for legal tender for payment of wages, and the banker would be forced to meet that demand so long as his customer had a balance to his credit. After exhausting his own stock of notes he would go to the Bank of England. The Bank of England, unable to obtain currency notes, would have to meet the demand by the issue of their own notes or of sovereigns withdrawn from the reserve in the banking department. In order to protect that reserve from immediate exhaustion, a violent rise in money rates and drastic curtailment of credit would have to take place. This would not only have a most serious effect on the prices of securities, on wages, and on the rates charged on Government borrowing, but also on the revival of trade and industry at a critical moment when the revival of trade and industry is the most important object we have in hand. It is to be remembered, further, that the inflation of the currency is not a peculiarity of our system; it is not confined even to the belligerent countries. It is a phenomenon of world-wide extent. A new level of world prices must be established before we can say with anything like exactness what amount of currency is required. To act before that level is established might easily produce evil consequences by restriction beyond what is necessary or justified, without any compensating advantages in any other direction.
Lord Cunliffe's Committee went carefully into this question. The conclusion of that Committee, if it is to be criticised, will, I think, at any rate, not be criticised as erring on the side of heterodoxy. They recognised clearly that the restriction of inflation is impracticable until the conclusion of the period of demobilisation and the cessation of war borrowing. But
whilst a direct limitation of further currency issues is not, in my opinion, a step which is at the moment practicable, there is no reason why we should not, and there is every reason why we should, attack the underlying causes as quickly as possible. The first remedial measure is to reduce expenditure. The second is to meet that expenditure as early and as fully as we can out of revenue. The third is, when we are obliged to borrow, to borrow from real investors. The fourth is to repay Ways and Means advances. The fifth, and last, is to fund the immense volume of short-dated Treasury Bills. Measures like this can be rendered practicable only by the strictest national and individual economy.
4.0 P.M.
I should like the Committee to consider for the moment what is the position. The hard, inexorable economic facts are obscured by a fictitious appearance of wealth. There are between two and three times as much legal tender money in circulation as there was before the War. The deposits of the joint stock banks have more than doubled. The position of those banks, judged by every approved criterion of sound banking, is stronger than ever it was before. Almost the whole of their additional deposits are covered by the best of all banking assets—short-dated British Government securities. But these securities, standing behind the deposits and standing behind the legal currency, represent to a large extent not existing wealth, but wealth consumed in the operations of war which it must be our business to replace out of the exertions of the present. Both are drafts on future labour and the future creation of wealth. Pending payment they are an immense reservoir of artificial purchasing power, out of relation to the actual wealth on which it operates, and therefore diminishing in effect with each new step in its increase. Look beyond the accounts for the year and you see a different picture. We have sold £1,000,000,000 of our foreign investments, losing an equivalent power to draw on the wealth created in foreign countries. We have incurred debt to the extent of £1,300,000,000. Against this we have claims on our Allies and on our Dominions, but the position of our foreign debtors forbids us to count on these claims for much large immediate relief. Ultimately and gradually that relief will, we hope, mature, but we
cannot count upon it for immediate purposes. For years to come a considerable part of our production must be devoted to paying our foreign creditors; a large part to make good the wastage and arrears of war. Our roads, our railways and, in a lesser degree, but in some degree, our machinery suffered from the absence during these past years of the ordinary upkeep and development. The supply of houses, which was short before the War, is now hopelessly in arrear. A large part of the production of the next few years—I do not know whether I ought to say few years—but a large part of the production of the coming years, both of the produce of labour and of capital, will be needed to make good these losses and to pay the new liabilities we have incurred. I beg the Committee, therefore, to be under no misapprehension as to the magnitude of the task which lies before us. I repeat that there is urgent need for national and individual economy. Nothing but a united effort of all classes, comparable to that which we have seen in the years of war, can enable us to face the years of difficulty which must follow on the conclusion of so great a struggle.

Sir J. WALTON: Government economy.

Mr. CHAMBERLAIN: Certainly, Government economy first and foremost. I do not like to leave this subject without expressing, on my own behalf and on behalf of the Government and nation, our grateful thanks to the National War Savings Committee for the immense and successful effort which it made during the War to bring home the need of economy and to secure for the State resources without which it could not have paid its way, and for the time and labour which the members of that body and associated bodies ungrudgingly gave to the public service. May I express the hope that they will lend to me, in the difficulties which still confront us, the same ready and generous assistance which they have offered to all my predecessors?

Orders of the Day — FUTURE POLICY.

Mr. CHAMBERLAIN: That review of our position brings me to the consideration of the policy which we ought to follow. The deficit of the current year, on the present basis of taxation, is, as I have said, £275,000,000 or £300,000,000. But the current year is a wholly abnormal year. Expenditure is swollen by the overlapping of war charges. Peace is not yet signed, and even when peace is signed war
charges continue. On the other hand, the Revenue receipts are swollen by sums arising out of the conclusion of the War, and the result is that neither side of the balance sheet gives us a true picture of our normal post-war position. But, if this year is abnormal, next year, if not equally abnormal, will, at least, be similarly disturbed alike by the overlap of war charges and the overlap of war receipts. The expenditure side will be swollen by demands arising out of demobilisation, out of the condition of the railways, and of coal production. On the other hand, there will be an overlap of existing Excess Profits Duty, and an overlap of receipts from the sale of Vote of Credit assets. Neither this year nor next year, nor, perhaps, the year after, will, therefore, be entirely normal, and in inviting the Committee to consider what our policy ought to be, I am driven to the hazardous expedient of casting my mind forward into the future to an imaginary normal year.
The Committee will recognise at once what a dangerous and difficult experiment that is to make. I recall but one case in which it was attempted. Mr. Gladstone in 1853 forecasted an expenditure over a period of seven years, and almost before his speech was uttered his calculations were upset by the outbreak of the Crimean War. God forbid that my calculations, after all we have gone through, should be upset by a similar cause! But, apart from that, I cannot conceal from myself that I may be wrong in all the assumptions I make, and that I may be wrong in many. But I must have some basis on which to ask the Committee to proceed, and as far as such a thing is possible, the future should be laid open so that Members may see something of what is in prospect. I will attempt the task. For reasons which I will explain later I shall assume that by that time the Excess Profits Duty as we now know it will have ceased to exist. I shall assume further that the available assets out of votes of credit have all been realised, and that no further funds will be drawn from them. I shall leave out of account for the present the sums we may expect to receive on account of indemnities from the enemy, and in payment of interest and repayment of capital lent to our Allies.
I shall present a picture of our liabilities and our resources standing by themselves alone. I think that will be the best
course to take. The necessary reductions can be made later on when our knowledge is more exact. On the basis I estimate the revenue of this future normal year on the existing basis of taxation at £652,000,000, made up of £198,000,000 derived from customs and excise, £400,000,000 from inland revenue, and £54,000,000 from other sources. The calculation of our expenditure in that imaginary year is an even more difficult and hazardous task. I can only tell the Committee the hypothesis which seems to me most nearly to approximate to the probable truth. For the purpose of my balance-sheet I assume that the deficit on the railways and the coal mines is made good, and I know nothing more urgent than that steps should be taken to deal with both of these deficits at once. I assume that all fresh loans to the allies will cease, and that other abnormal expenditure, notably that in connection with the Ministries of Labour, Food and Shipping will also have terminated. Then comes a more uncertain item. What am I to estimate for the Army and Navy; what am I to put down for the new Air Force? I see the First Lord of the Admiralty on one side of me with that Janus-like gentleman the Secretary for War and for Air on my right, and I am not sure that they will assent to these estimates at all. But for the purposes of my balance-sheet I have assumed the figure for the three forces at £110,000,000, being rather more than a 40 per cent. increase on the cost of the Army and Navy before the War. We all hope that as a result of the Peace Conference the demilitarisation of Europe may be effected without fresh naval competition being started in any other quarter. I hope that it may be possible, and I believe it should be possible to reduce the numbers both of the Army and the Navy, but whatever reduction may be possible in that respect the pay will be higher, material will be more expensive, and none of these factors, numbers, pay, or cost of material, are yet capable of exact estimation. I give my figure for what it is worth. You can vary my calculations according to your own estimates of whether I have placed it too high or too low.
The debt charge I place at £400,000,000, including a sinking fund of half per cent. The Civil Services at £190,000,000; Customs, Inland Revenue and Post Office at £53,000,000, and other services at £13,000,000, making a total expenditure
of £766,000,000, against which, as I have told the Committee I can count only on a Revenue of £652,000,000, leaving a deficit of £114,000,000. I propose to ask the Committee to raise this amount, approximately, not all in the current year, but by taxes which in the full year would bring in approximately that figure. On the assumption that my calculations are not unduly sanguine, on the further assumption that they are not upset by forces beyond our own control, and on the yet further assumption, about which I feel as much hesitation as about either of the other two, that Parliament will husband our resources and observe economy, the Committee knows the worst that it has to face and any funds received in repayment from our Allies or in indemnities from our enemies will be available in so far as they are capital for the reduction of our National Debt, and in so far as they are interest for the relief of our own interest charges, and either way indirectly for the relief of the burdens which I am now going to ask the Committee to assume.

Orders of the Day — LAND VALUE DUTIES.

Mr. CHAMBERLAIN: Before I explain the methods by which I propose to raise this large sum there are two subjects on which I must speak, and I think it will be convenient that I should deal with them now. I refer first of all to the Land Values Duties. I do not need to remind the Committee that at the time of their birth these duties were the subject of fierce and prolonged debate, and, as fate would have it, the Prime Minister and I took opposite sides. There is a certain delicacy in a Chancellor of the Exchequer touching the handiwork of his existing chief, and it is not made easier if the Chancellor of the Exchequer, before being a Minister serving under the Prime Minister, was one of his most active opponents. But fortunately on this occasion I have the benefit of the advice of the Prime Minister instead of having to face his opposition. I am glad to be able to say at once that the Prime Minister and myself, no less than the rest of our colleagues in the Government, are entirely agreed as to the course that ought to be pursued. Hon. Members interested in this subject know that from the first the Revenue yield of these duties has been disappointing. But that is not all, and it is not the worst. For one reason and another, in consequence in part perhaps of the
original character of the taxes, in part of the inherent difficulties of attempting at one and the same moment to carry out all over the country a new and unparalleled valuation and simultaneously to raise revenue upon it, and in part, and in no small part, owing to decisions of the Courts, the legal propriety of which I must not be thought for a moment to question, the taxes by now have become unworkable. In certain cases duty is declared to be leviable in circumstances in which Parliament never intended to exact it, and in which admittedly it would be unfair and contrary to the public interest to levy it, and legislation to reverse the judgment in question was only held up in consequence of the outbreak of war. In other cases the taxes, owing to other decisions, cannot be levied, nor can even a valuation be made upon which any tax could be levied. The result is, as I say, that the taxes in their present form are unworkable. They must either be amended or repealed; they cannot be left indefinitely as they are. But if I were to attempt the task of amendment or repeal at this moment, in the present divided state of public opinion on the subject, and in the absence of full knowledge as to the facts of the case, I should be inviting, as we hope on the eve of the conclusion of peace, a recrudescence of all the old controversies, which we have forgotten during the War. Under the circumstances, the Prime Minister and I joined in recommending to the Cabinet that before action is taken the present position of the duties should be referred to a Select Committee of this House in order that they may explore it and may recommend a course of action in regard to it. We hope that such a careful inquiry, before which all parties can be heard, may secure something in the nature of common agreement as to the best course to pursue in future. It is fair that I should add that whilst neither the Prime Minister nor I wish to prejudge or to attempt to prejudge the decision which such a Committee may form upon the duties or upon any taxation which may be introduced in their place, we both think it is of importance that there should be a trustworthy valuation of the land of the country available for public purposes whenever it is required.

Orders of the Day — MOTOR SPIRIT DUTY.

Mr. CHAMBERLAIN: Next I must say something about the Motor Spirit Duty. Since I came into office I have had to give a good deal of attention to matters connected
with this duty. It was imposed by the 1909 Budget. The full duty, formerly 3d. per gallon, raised in 1915–16 to 6d., applies only to cars used for private purposes. Cars used for trade or husbandry, hackney cars, cars of doctors or veterinary surgeons when used for professional purposes, are all entitled to a rebate of half the duty. Motor fire engines and certain other cars are entitled to free spirit. Petrol used by stationary engines, motor boats and aeroplanes or for cleaning purposes is also free. In 1913–14, the year before the War, about 47 million gallons paid full duty, over 40 millions paid half duty, and nearly 8 millions were delivered free of duty. I think the Committee will see that a tax of this character is open to serious objection. It is complicated and therefore expensive to administer and collect. In the second place, the test of dutiability is not in the nature of the article but in the use to which it is applied. The same quality of spirit is dutiable if applied to one purpose and not dutiable if applied to another. The machinery for collecting the duty prescribed in the Act is that the duty is to be collected at the full rate and repayment made where the user is entitled to an abatement. In practice the extreme inconvenience of this is overcome in the case of some large users, such as the London Omnibus Company, but the examination of the claims for rebate from small owners gives rise to an immense amount of trouble and an immense consumption of time and irritation, which is correlative not to the value of the tax so much as to the trouble of investigating the claim. Lastly, as the Committee will observe, in a tax of that kind so levied there is a wide opportunity for evasion and for fraud.
I think there is a great deal to be said for levying the charge, whatever it may be, that we wish to levy on the users of motor cars in some other form than in the form of a tax on petrol, but a satisfactory scheme of licensing could only be worked out after conference with the various interests affected, and I desire before making any proposals on the subject to have the advantage of the advice and assistance of the Minister of Ways and Communications as soon as the House has placed him in the saddle. I propose therefore to discuss this question with him in the interval between the present and the next Budget and I hope by next Budget Day that I or my successor may be in a position to make proposals in regard to it.

Orders of the Day — EXCISE DUTY ON MOTOR SPIRIT.

Mr. CHAMBERLAIN: But there are two points about which I must say something at once. The first relates to the existing Excise Duty on Motor Spirit. That Duty yields only a trifling revenue of some £50,000 a year derived entirely, I think, from Scottish Shale Oil. But a difficult position has recently arisen in regard to benzol manufactured in this country. Before the War benzol was one of those spirits which were occasionally and experimentally used for propelling motor cars but were not taxed when so used. In refraining from taxing it the Board of Customs and Excise acted upon instructions issued by the present Prime Minister and announced in the House of Commons in the early days of the new tax, to the effect that they were to aim at the taxation of spirit which was ordinarily and generally used for driving motor vehicles and not to attempt to levy the tax on the various substances, which though not generally used as motor-car fuel could be or were occasionally used as substitutes for or in association with it.
That was the position up to the War. The War has changed the position completely. During the War the production of benzol for war purposes was stimulated by the Munitions Department with remarkable results. There is now in existence a manufacturing industry with large stocks of spirit which the Munitions Department no longer requires, and a large continuous output amounting now to about 100,000 tons a year, of which 70,000 tons or thereabouts—that is equivalent to 21,000,000 gallons—are available for motor fuel. The Minister of Munitions promised to hand over those stocks to the trade for the use of motor petrol. The Petrol Control Committee undertook to release for motor fuel as much as could be put on the market. Then the Board of Customs and Excise felt it to be their duty to step in and to issue a warning that benzol so applied might be subject to taxation.
I have to consider what is to be done. We have here a case of an industry found vital during the War, created and stimulated for war purposes, practically created at the Government's instigation and under Government guidance. That industry is suddenly confronted with the loss of its market owing to the cessation of the War. That is not all. Benzol is not only important to the nation as an additional indigenous source of the supply
of motor fuel, but it is a very important ingredient in the dyeing industry, an industry which, as the Committee knows, has been found so vital to our existence and to our trade that not only this but preceding Governments have done everything in their power to establish it and to promote its growth in this country. Under the circumstances, and acting on the advice of the Board of Trade, I propose to give legal authority to the exemption of benzol from taxation by repealing the Excise Duty, and I am glad to think that the Scottish shale industry, an industry which it is also in the national interest to develop, will, of course, obtain the advantage of the repeal.

Orders of the Day — MOTOR SPIRIT LICENCE DUTY.

Mr. CHAMBERLAIN: There is another subject in regard to motor spirit, namely, motor spirit licences. The motor spirit licence duty was imposed as a war measure to restrict the use of private motor cars at the time of shortage. Its revenue effect was purely secondary. The necessity for restriction has now gone. The Licence Duty was collected by the Petrol Control Department of the Board of Trade, a Department which, I think, did its work extremely well but which is now in process of being dissolved. I am told that if we abolish this small Licence Duty, with all its anomalies, we shall at the same time enable the Board of Trade to put an end to the employment of this Department with its 300 officials. In that matter, as I anticipated, the Committee will support me.

Orders of the Day — IMPERIAL PREFERENCE.

Mr. CHAMBERLAIN: That brings me to a subject which I, at any rate, regard as the most important feature of the present Budget. I come to the establishment of Imperial preference. Let me say at once at this stage, to prevent any misapprehension and any disappointment, that I am not propounding, and cannot propound to-day a general trade policy for this country. My right hon. Friend the Leader of the House dealt with that question a week or two ago. He explained the steps that would be taken, and, if the steps which are found to be necessary require legislative sanction, that sanction must be given in some other measure than the Finance Bill. For the present my task is only to give effect to the declaration of the Imperial War Cabinet and the Imperial War Conference two years ago, in which the representatives of the British Government concurred, that as soon as
possible preference on duties now or hereafter existing should be introduced for goods of Imperial origin.
The range of our present Customs Duties is not wide, though it covers more articles than people are apt to suppose. Only three Colonial or British oversea products fall into the categories subject to duty at the present time in any large quantity—namely, tea, cocoa, and rum; but there are many other dutiable articles which appear in our Customs returns from His Majesty's possessions overseas. I need name only such articles as coffee, sugar, tobacco, and wine. Though the beginnings may be small, the measure of what I am inviting the Committee to do is not the amount of British Imperial trade which secures preference at this moment, but the opportunities for the development of that trade, which I invite the Committee to open out. There is room for vast extension. There never was a time when it was more important to the Empire as a whole, or to us in particular, that development should take place. From the small beginnings of to-day I hope that many Members of this House will live to see a really wide structure of inter-Imperial trade develop
In deciding on the form which preference is to take I have had four main considerations before me. In the first place the preference should be substantial in amount. In the next place the rates should as far as possible be few and simple. Thirdly, where there is an existing Excise Duty corresponding to the Customs Duty which is affected, the Excise Duty must be proportionately altered. We cannot give preference at the expense of the home producer. Lastly, in carrying out this policy I have to remember the interests of our Allies and as far as practicable to avoid increasing duties on their products for the purpose of giving preference.
As I have said, the range of our existing duties is small. It falls mainly into three classes. First there are the new Customs Duties imposed by Section 12 of the Finance (No. 2) Act, 1915, which carry with them no corresponding Excise Duty, on cinematograph films, clocks and watches, motor cars and musical instruments. On these duties I propose to fix the preference at one third, which is what I may call the general Empire rate, in so far as a general Empire rate exists.
The next class comprises taxes on consumable commodities apart from alcohol. These are in essence Revenue duties pure and simple. On these in many cases the duties are themselves very high in relation to the value of the articles, and a preference of one-third would be both more than I could afford and more than I think is necessary or justifiable. Before coming to any definite decision I thought I ought to consult with the interests affected. I accordingly appointed a small Departmental Committee of representatives of the Colonial Office, the India Office, the Board of Trade and the Board of Customs and Excise and asked them to get into touch with representatives in this country of the producers, the importers and the manufacturers of the articles affected, and to ascertain their views as to the probable effect of preference on the trade and industry of the United Kingdom and the British Possessions and on the rate of duty. After considering the views of the interests affected as gathered by that Committee I have come to the conclusion that for preference on this class of article I should be justified in recommending to the Committee a rate of one-sixth of the duty. I do not of course mean to imply that this rate was, in fact, recommended by the trade interests who were consulted. No such absolute uniformity was to be expected. The differences between different trades are considerable. In some cases their recommendations approximated closely to my figures; in some they varied to a smaller or larger degree, but on consideration of the facts I have come to the conclusion that one-sixth would be an effective preference on these articles, and I hope that it will be satisfactory to those concerned. I take the opportunity of thanking the representatives of the trades for the assistance which they have given on this occasion as indeed they so willingly do whenever they are appealed to.
I ought to say at this stage that I propose that in the two classes of goods with which I have already dealt, namely, the duties on manufactured articles and the duties on consumable commodities other than alcohol, the preference should be given by way of reduction of the existing duties on Colonial produce and not by way of surcharge on foreign produce.
My right hon. Friend asked me to give him some further information as to the character of the articles concerned. The
most important is tea. The estimated revenue from tea in the coming year is, without the change in duty, £16,000,000. The duty is 1s. preference will therefore be 2d. Even in normal circumstances before the War, when the importation of tea was unrestricted, nearly 90 per cent. of the tea was already Empire grown. The results, therefore, of the Grant by way of preference will be practically equivalent to the reduction of the duty on tea, and I anticipate that that relief, as it always has done, will lead to a largely increased consumption. In the circumstances the loss for a full year involved in that preference may be put at £2,300,000, but probably will not be more in the current year, which is not a complete year, than £1,800,000.
The next article is cocoa. The estimated revenue from cocoa is £2,400,000. About two-thirds of our imports now come from Empire sources. Preference at the rate of one-sixth would be worth 7s. per cwt., meaning a loss of revenue of about £200,000.
The revenue from coffee is small—£650,000—and a small proportion, only about 20 per cent. of our imports normally come from Empire sources. The amount which could be grown in the Empire is capable, I think, of almost limitless expansion. The preference of one sixth of the duty which I am proposing is worth 7s. per cwt., and would mean on the present proportion an immediate loss of about £20,000 in revenue. Chicory will, of course, follow coffee, as it always does, and the Excise Duty will be proportionately reduced. The hon. and learned Member for York, I remember, used to make my life a burden upon the difficulties of the home chicory grower.
Now I come to sugar. The estimated Customs Revenue from sugar is £39,000,000. Only a very small proportion of the imports, 7 per cent., normally comes from Empire sources, and the preference would be worth about 4s. per cwt., which would mean a loss of revenue of about £500,000. The Excise Duty on beet sugar produced in this country will be similarly reduced. It already stands at 2s. 4d. per cwt. less than the Customs Duty.
Dried fruits are only a small matter. I need not trouble the Committee with the figures, but the preference will be given on them also. Coming now to tobacco, the estimated revenue on the present basis
is £47,000,000. Only 2 per cent. of the imports came from Empire sources, but a very considerable expansion is possible if tobacco growing were developed and improved. A preference of one-sixth, or about 1s. 4d. per lb. on unmanufactured tobacco, the rate which governs the other duties, is a substantial amount which will, I hope, stimulate increased production in India and the Colonies concerned. The Excise Duty on tobacco grown in the United Kingdom will again be correspondingly reduced. In the case of both tobacco and sugar it is proposed that the preference on the manufactured articles should be based on the amount of the British-grown product in the imports.
Then I come to motor spirit. The estimated Customs revenue is about £2,200,000. Only some 18 per cent. comes from Empire sources. A preference of one sixth, or 1d. per gallon, may mean a loss of revenue of about £60,000. I have decided for other reasons, as I have already explained, to recommend the abolition of the Excise Duty.

An HON. MEMBER: What about Colonial wines?

Mr. CHAMBERLAIN: I am coming to that.
That concludes my second class. I come now to the third class of dutiable articles, beer, wine and spirits. There is no importation of Colonial beer. The arrangement of a preference would be complicated and difficult, and at any rate for the time we may safely neglect it. I propose to do the same for the same reason with table waters, matches, and playing cards. Cards are hardly worth mentioning except that I might be attacked afterwards for concealing what I was doing or was not doing. Then I come to wine. The estimated revenue on wine is £1,250,000. Only about 7 per cent. of the imports come from Empire sources at present, but the industry is one which is being developed, and is capable of being further developed both in Australia and South Africa. Both Dominions attach importance to it. At present the wine duty is levied at two rates, 1s. 3d. and 3s. a gallon, according to strength. A preference of one-sixth on those small duties, I am advised, would be quite ineffective. On the other hand, in consideration of the interests of our Allies, notably of France end Portugal, and of some neutrals, we are unwilling at such a moment as the present to raise
the duty on a very important article of their export. We propose therefore to give the preference by way of reduction and to allow 6d. on the lower rate of 1s. 3d. and 1s. on the higher rate of 3s. There is an additional tax on wines imported in bottle of 1s. a gallon on still wine and 2s. 6d. on sparkling. I propose to allow 6d. preference on the first and 9d. on the second. Lastly, I come to spirits. These again need special treatment. They constitute my most difficult problem. The State derives a very large revenue from the Excise Duty on spirits manufactured in this country, and it is essential that preference shall not be given in a form which would appreciably reduce the yield. For that reason it is necessary that spirits should be taken in a class apart, as an exception to the general rule which I have followed of giving preference by reducing the duty on imported products. To give a preference by reduction would involve a corresponding reduction in Excise Duty and a loss of revenue which I am unable to face. For the purpose of the duties, spirits are divided into five classes, four subject to Customs Duty, namely, rum, brandy, Geneva and other sorts, and the fifth home-made spirits, including whisky, subject to the Excise Duty. Over 80 per cent. of the rum comes from Empire sources. The imports from the Empire of other spirits are at present small, and I think likely to continue so, at any rate for a long time to come, though they are capable of development. As regards the amount of the preference, I have come to the conclusion that anything like a rate of one-sixth, with such high duties as are charged, would be too high. It would amount to 5s. a gallon on the rate of duty in force in the year which has come to an end, and a larger amount if this duty is increased. I propose, therefore, to fix the rate of preference at 2s. 6d. per gallon, not by a reduction in the duty on Colonial spirits but by an increase in the duty on foreign spirits. That will give me a slight additional yield of revenue. The effect of the preference proposals as a whole on revenue will be a reduction of about £2,500,000 in the current year, and something over £3,000,000 in the full year, without allowing for any increase in the imports of Colonial products. The great bulk will be in respect of the tea.

Orders of the Day — DATE OF PREFERENCE.

Mr. CHAMBERLAIN: Now as to the date on which preference will take effect. The general date which I
propose is 1st September, so as to allow time for administative machinery to be set up. But tea requires special treatment as the great bulk of the supply comes from the Empire. To postpone the introduction of the new rate too long might lead to the withholding of stocks, and the consumer going short. After consulting the distributing trade, I propose that the reduced duty should come into force on 2nd June. If these results are small, it must be remembered that the immediate bulk of Colonial products affected is small, but the results, both on the Revenue and, as I hope, on the trade, will proceed increasingly as the years go on.
Now I come to the new taxation which I propose to impose.

Orders of the Day — SPIRITS—NO LUXURY TAX.

Mr. CHAMBERLAIN: I am warned by the clock to get on with my task as rapidly as I can. Therefore I confine myself at this moment to saying that I do not propose to proceed with the Luxury Tax. I am quite ready to give my reasons for this, but I think that I should unduly delay the Committee if I did so now. I come first to spirits. I may remind the Committee that it was found necessary to restrict the delivery of spirits from bond, as from the 1st of April, 1917, to a limit not exceeding 50 per cent. of the deliveries in 1916. Owing to a variety of causes, including the restriction just referred to, the increased duty on spirits, the operation of the Immature Spirits Act, and I am afraid I must add some withholding of stock, the supply of spirits fell short of the demand and the prices rose to an extent which led the Food Controller, in consultation with my predecessor, in the spring of last year, to limit them by imposing a maximum scale of prices, which was announced on Budget Day and provided for a substantial increase in the then duty.
Two changes affecting the position have since occurred. In the first place the scale of prices was revised in August so as to afford relief to a section of the trade which had bought their stocks at somewhat inflated prices and had not then had an opportunity of disposing of them. Secondly, the quantities allowed to be delivered from bond were increased as from the 24th February last from 50 to 75 per cent. of the quantities delivered in 1916, bringing the authorised clearance up to 21,400.000 gallons a year. Both of these changes have further increased the profits of the trade, and they are now in the aggregate more
than my predecessor estimated, and more than I think is reasonable. And the Committee will not be surprised to learn that I propose to ask that, at any rate, part of these profits should be diverted to the Exchequer by a further increase in spirit duty from 30s. to 50s. per proof gallon. This increase will, involve some readjustment of trade prices to prevent the burden falling unequally on different sections of the trade. The scale consequently is being revised so as to distribute the additional duty as equitably as possible throughout. The alteration will only affect the consumer in a few cases, such as the price of spirits sold to him in bottle, or in jar or cask. Owing to the great rise in the cost of bottling and the prices fixed for the bottle and the glass respectively, the sale of spirits by glass has been much more remunerative than the sale by bottle, and I think that some of the difficulties complained of in the early part of the year during the epidemic of influenza in reference to the obtaining of spirit were due to this cause. The new price for the bottle will be 10s. 6d., and this will remove this cause of complaint. That increase will produce an additional revenue of £21,650,000 in the full year on the present authorised amount of clearance. For the current financial year, a month of which has already passed, it will bring in an increased yield of £19,350,000.

Orders of the Day — BEER (LARGER AND BETTER SUPPLY).

5.0 p.m.

Mr. CHAMBERLAIN: I pass by a not unnatural transition from spirits to beer. Beer is no less favourable to my attentions. A year ago when the authorised annual output of beer was 33⅓ per cent. of the 1916 output, my predecessor found that excessive profits were being made, that the prices charged to the consumer were higher than could be justified by the then existing conditions. He decided in consultation with the Food Controller to increase the duty from 25s. to 50s. a barrel. At the same time the partial control of prices previously instituted was continued in a modified form. The order limiting prices did not touch sales on any portion of licensed premises other than public bars, and it did not refer to all articles sold. It did not touch draught beer above 1034 degrees or any bottled beer. The controlled prices, which were fixed so as to enable the trade to secure sufficient profit without unduly raising the prices of the beers, were not affected by the Order. It was, however, subsequently found that
for beers of higher gravity and bottled beers the prices charged were in many cases increased much beyond the limit which would have provided a reasonable profit. Further, after the Armistice, it became possible to some extent to meet the public demand for more and better beer, and as from 1st January an additional quantity has been allowed to be brewed at a higher average gravity. The increase, which was in the proportion of 25 per cent. of the standard barrelage for 1918, had of course the effect of reducing the cost of production, and the trade was thus in a position to make still larger profits than before. In view of that, the Government thought it right to warn the trade that while they might have the run of those profits until Budget day, they must expect an increase of duty at that time. A new scale of prices was issued at the same time that the increased barrelage was allowed. This scale allowed, as I have said, a fair margin for further taxation to be taken in respect of the increased barrelage. The necessity which existed during the War of rigidly restricting the amount of grain to be used in brewing has now passed away, and the Government after full consideration are prepared to take a further step in allowing increased supplies of beer, and of beer of a better quality, and brewers will accordingly be allowed to increase their output by 50 per cent. on their 1918 barrelage. This, added to the 25 per cent. increase sanctioned last January, will mean that the restricted barrelage which was allowed in 1918 will be increased by 75 per cent., bringing the total authorised barrelage for the year up to 20,000,000 barrels, compared with the pre-war barrelage of about 36,000,000.
In order that the consumer may be able to obtain beer of better quality brewers will be at liberty henceforth to brew to an average gravity not exceeding 1040 degrees in Great Britain, as compared with the 1032 degrees which is the existing limit, and with the pre-war gravity of 1050 degrees under unrestricted conditions. The average gravity of beer brewed in Ireland, which has always been higher, will remain at 1047 degrees, as compared with 1065 degrees before the War. [An HON. MEMBER: "Why?"] In consequence of the particular conditions and character of their trade. This increase in the average gravity which the brewers in Great Britain are allowed to brew will, I hope, go far to remove the grievance, of which
some of them have complained, that they were unable to maintain their special trade at the low gravity hitherto imposed upon them. The effect of further relaxing the restrictions on output while continuing the present scale of prices to the consumer, which we do not propose to alter, will be to increase the margin of profit for taxation beyond what was contemplated when the prices were fixed in February last and the trade warned to expect it, and I now feel justified in proposing to appropriate to the Exchequer from these profits a total amount of 20s. per standard barrel by raising the duty from 50s. to 70s. In fixing this rate of duty I have had to consider the diversity of conditions existing in the trade and to give fair consideration to those who are least fortunately situated.

Orders of the Day — EFFECTS OF CHANGES ON REVENUE.

Mr. CHAMBERLAIN: I will indicate very shortly the effect of the proposal on the revenue of the current year. I put my estimate of the revenue from beer on the existing basis of taxation at £37,800,000, and by the existing basis I mean the existing barrelage and the existing rate of duty before any alterations are made. Any increase of output, of course, increases the yield of the tax quite apart from any increase in duty. In estimating the additional revenue I shall secure, I have to take account of both the increased number of barrels on which duty will be paid and of the increased rate of duty on each barrel so charged, and I estimate the combined effect of these two increases at £31,200,000 for a full year and for the current short year £22,200,000.
I should, perhaps, add—in fact, the Government desire that I should add—that, as I think the Committee know, the character of the control to be exercised over the trade in alcoholic drink is now exercising the attention of His Majesty's Government. That is not wholly or mainly a revenue matter; but we think it right to say that, should at some future time a yet further increase of barrelage be allowed, that would be a fair reason for a still further increase in taxation.
In this connection I have one small change to propose, with the object of bringing the charges on beer made in private houses into some kind of correlation with the increased charges now made on beer brewed for sale. The provisions of the existing law are of long standing, and, however appropriate they may have been to a time when the Beer Duty was 6s. 8d. a barrel, they are not
suitable when the duty is raised to 70s. a barrel and when brewers for sale are still restricted as regards output and gravity. I thought, first of all, that it might be possible, in view of the new high rates, to prohibit domestic brewing altogether, but, in deference to an old-established custom in certain agricultural districts, I refrained from taking that course, though I could not view with equanimity or patience a large increase of private brewing in consequence of the increased duty imposed upon the brewers for sale. In the case of private brewers who now pay Beer Duty, no change is necessary, and they will remain, as at present, liable to Beer Duty, subject to the nominal Registration Duty of 4s. In the case of persons who do not pay Beer Duty, I do not propose to impose the Beer Duty as such, but to make them pay their contribution to the Exchequer by way of a Licence Duty. The revenue effect of these changes is negligible, except as some measure of protection against loss of revenue from other sources, but I think it is necessary for that purpose and for fairness.

Orders of the Day — EXCESS PROFITS DUTY REDUCED.

Mr. CHAMBERLAIN: I have finished with Customs and Excise. I turn now to direct taxation, and, first of all, I must say something about the Excess Profits Duty. The tax in its present form is a war tax. It was imposed under the stress of war, and when, in the midst of the enormous burdens we had to bear, it was felt that profits in excess of pre-war profits might justly be called upon to make a special contribution. It is open to many objections, but it was a rough and ready method of justice which Parliament, in its then, happily, not very critical mood, accepted without too much difficulty, and the revenue results of it have been most satisfactory during the War period. It was imposed for the first year at 50 per cent., then for a varying period at 60 per cent., and since the 1st January, 1917, at 80 per cent. It has been, as I have said, a good revenue raiser, but there are great objections to it. In the first place, it operates with unfairness and inequality as between firms with a good pre-war standard of profit and firms with a poor pre-war standard or no pre-war standard at all. In the second place, at the existing high rate nobody can doubt that it has encouraged wasteful expenditure. When £4 out of every £5 would have gone to the State if not spent by the owner, he was inclined to lavish expenditure on his business. But more
than that, it cannot be doubted that a flat rate tax of 80 per cent. on all profits over a pre-war standard or, where there was no pre-war standard, over a small margin, acts as a great deterrent to enterprise and industry and a great deterrent to new development. I do not wish under these circumstances to continue the tax a moment beyond what is necessary at so high a figure as at present; it would be contrary to public interest, and I do not propose to do it. On the other hand, I have to remember that, as I said, this is a war tax, that war expenditure is still continuing, that even after peace is signed war expenditure and the burdens of war will still remain, and I am not in a position simply to repeal the duty without finding anything to put in its place.
In these circumstances my first effort was to find some form in which the profits of business might be called upon to make a special contribution to the revenue of the country without the anomalies and the objections to which the present tax is subject. I had before me suggestions made to that effect by my hon. Friend the Member for the Everton Division of Liverpool (Sir J. Harmood-Banner) and by Mr. J. F. Mason, who was then a Member of the House, and who I very much regret is not now a Member, and by Mr. Lionel Hichens, a name well known in industry, and I had also the example of taxation imposed with similar objects both in the United States and in Canada. But my information is imperfect, and the time at the disposal of myself and my colleagues has been short, and we have been subject, as the Committee knows, to other daily grave preoccupations. I need not say that if a new tax is to be imposed, it would in any case be necessary that it should be carefully thought out and its advantages and disadvantages carefully weighed in order that we should not repeat the anomalies or injustices of the existing tax. Therefore the form of the tax would be of great importance, and such an inquiry takes time. I have had other suggestions made to me, but the Government have not been able to give to the subject in the weeks before the Budget the attention which it requires for a satisfactory solution.
Under the circumstances, therefore, I propose to the Committee, as a temporary and only as a temporary measure, to continue the existing tax for another year at the reduced rate of 40 per cent. I
anticipate that the yield of the Excess Profits Duty on this basis for a full year will be £50,000,000. The Committee, after listening to the amounts produced last year and anticipated this year from the higher tax may be surprised at the smallness of that figure, but it must not be supposed that the yield of the 80 per cent. rate under war conditions is at all a safe guide as to the yield under post-war conditions. I have to allow for the right of recoupment which is given by statute under certain conditions to those who have paid the tax. I have to allow for the fact that the high yield of the tax, and indeed the initiation of the tax itself, was based upon the fact that certain businesses were making extraordinary and abnormal profits. Under these circumstances, although the Estimate must of course be a very rough and hypothetical one, I am advised that it would not be safe to count upon a revenue of more than £100,000,000 if the tax continued at 80 per cent., and I expect a revenue of £50,000,000 at the lower rate of 40 per cent.

Orders of the Day — DEATH DUTIES.

Mr. CHAMBERLAIN: I turn now to Death Duties. The last alteration in the scale of the Estate Duty was made in the first Budget of 1914, and it has not been altered during the War. I think that my predecessors were right in so doing. Death Duties are not a suitable instrument for meeting a temporary emergency. It requires a generation for all the property subject to the tax to pass under it, and accordingly it is only when you are considering a permanent increase of revenue that the Death Duties ought to be raised. We have come to the time when we have to consider permanent increase of revenue, and I propose to ask the Committee to sanction such an alteration in the scale as is estimated to produce, in a full year, a sum of £10,000,000. Hon. Members will find particulars of this scale in the explanatory White Paper which is being circulated today.
I will only say here that no change is made in the case of estates not exceeding £15,000 in value. Estates between £15,000 and £20,000 which now pay at the rate of 5 per cent. will in future pay at the rate of 6 per cent. The present rates rise from 6 per cent. to 9 per cent. in respect of estates of between £20,000 and £100,000. A corresponding rise in the new scale would be from 7 per cent. to 14 per cent. At present an estate of £250,000 pays 12 per cent. I propose in the future that it
shall pay 20 per cent. The rate is now 16 per cent. on estates of £500,000, and the proposed new rate is 25 per cent. The maximum rate on the existing scale is 20 per cent., applicable to estates of over £1,000,000. I propose that estates between £1,000,000 and £1,250,000 should in the future pay 30 per cent., estates between £1,250,000 and £1,500,000 32 per cent., and between £1,500,000 and £2,000,000 35 per cent., and that estates of over £2,000,000 should pay 40 per cent., or double the existing maximum rate.
I do not conceal from myself or attempt to hide from the Committee the fact that these are very onerous rates of duty. They constitute, taken in conjunction with the Income Tax, a further differentiation between wealth derived from continuing personal exertion and wealth derived from accumulated capital. But they are more than that. They are an insurance for the safety of capital. Montesquieu said that taxation was that part of his wealth which each citizen gave to obtain the secure possession of the remainder.

Orders of the Day — A LEVY ON CAPITAL.

Mr. CHAMBERLAIN: There has been a good deal of discussion of late about a levy or tax on capital. If by a tax on capital is meant a small annual charge, then I think that that charge is as widely distributed and more fairly and conveniently raised in the shape of our Income Tax. If, on the other hand, there is meant a large levy on capital, a large slice to be taken out of accumulated capital, then I beg the Committee to consider what the result might be. It is a bad time to propose such a tax when, for the past five years, you have been begging people to save, and when you are still obliged to ask them to save and to give you their savings. It is a bad time to tax those who have responded to your appeal by reducing their expenditure and making economies and to let those go free who disregarded your instructions and who spent their money when it was not in the interest of the State or in ways which were not in the interest of the State.
But consider a levy on capital apart from the circumstances of the moment. The Death Duties make such a levy once in a lifetime, and at a time when the taxpayer receives an accession of income, and since they are levied only at death, and we do not all die at the same time, the process of making the valuation and of levying the tax is a task of manage-
able proportions. It can be done justly and fairly as between man and man, and it can be done with a minimum of evasion or of fraud. And since only a portion of the capital of the country is dealt with in any one year the tax is paid without any disturbance of credit and without any depreciation of securities to the detriment either of the State itself or of the individual. If a levy was to be made on all the capital of the country at one and the same time by the tax collector all these advantages would be lost. To make an efficient valuation fair as between man and man and fair as between the revenue and the State would exceed the power of any revenue administration in the world, and I make bold to say that our administration is the best. It would exceed their power at any time, and still more now when the staff is still depleted owing to the War, and when they are charged with the overwhelming new responsibilities which the War has brought. It would be open to all the objections and all the difficulties to which the simultaneous valuation and taxation of the whole land of the country gave rise under the Land Values Duties, and it would be open to that objection on a vaster scale, because you would have to value not only real but personal property. Since very few people would have money lying idle sufficient to pay their obligations under the tax, it would mean an immense disturbance of credit. Everyone would be seeking to sell securities of one sort or another, and, where all are sellers, who would be buyers, and who shall measure the loss to the country by the depreciation of all securities? Who shall measure the loss to the individual through the same cause?
If, to avoid these difficulties, the State takes payment in kind, then all the difficulties of valuation still remain. The State cannot refuse to accept property of any kind at a valuation which the State itself has put upon it, and we should be left the owners of odd parcels of land and odd parcels of shares in every conceivable part of the country and in every conceivable undertaking, many of them of very doubtful value and very difficult to realise. I will only add that if it were thought that this expedient, once resorted to, would, as might well be the case, and as some desire should be the case, be resorted to again, at every moment of difficulty or of extravagance, it would then be the greatest possible discouragement to industry and
enterprise that the mind of man or Parliament could devise. It would be the strongest deterrent to saving and the creation of new capital, and it would be the strongest incentive to wasteful expenditure and to the dissipation or withdrawal of existing capital. I say boldly that, whatever be our views on the distribution of wealth or on the respective shares of the fruits of industry to which capital and management and labour are entitled, our great need now and for years to come is that we should have not less capital but more capital, and I hope the Committee will lend no countenance to so hazardous, and, in my opinion, so disastrous an experiment.
I estimate, as I have said, that this new scale of Death Duties will add £10,000,000 in a full year and £2,500,000 in the current year, taking effect from the date of Royal Assent to this year's Finance Bill. There is one small matter in this connection with which I must deal. The existing rate of interest charged in respect of outstanding duty is 3 per cent. That no longer corresponds at all to the value of money. It acts as an encouragement to postpone the payment of the duties, and, without wishing to suggest for a moment anything in the nature of a vindictive or punitive rate, I think it would be proper now to raise the rate to 5 per cent.
Before we leave the subject of the Death Duties, let me say that the Committee is aware that certain relief was granted from the Death Duties as regards the estates of members of H.M. Forces, Mercantile Marine, and fishermen. I now propose to extend those provisions in two respects. At present the death must have occurred within twelve months of the wound, accident, or disease to which it was attributable. Experience has shown that that period is not long enough to cover a considerable number of cases which fall within the spirit, if not the letter, of the law. I propose to extend the period to three years, and to give that extension retrospective effect. Further, I hope the Committee will agree that there should be power to grant relief to persons belonging to the categories that I have named dying within the same period of three years as the result of wounds, accidents, or diseases occurring after the War, but, in effect, as a direct consequence of the War. I have in mind such cases as military operations if they continue anywhere after peace is signed, and cases where death or accident may be due to mine-sweeping
or removal of dangers which the War has left behind. Provisions to that effect will be inserted in the Finance Bill.

Orders of the Day — INCOME TAX.

Mr. CHAMBERLAIN: I come now to Income Tax, the last subject with which I have to deal. I have already mentioned the satisfactory yield of the Income Tax last year. In the current year we expect to do even better. Last year's Income Tax and Super-tax together produced £291,000,000. This year we expect them to produce £354,000,000, an increase of £63,000,000 without any further change in the rates. Apart from normal growth, the increase is due to two causes: First, owing to the imposition of the tax at higher rates last year, the arrears carried forward from last year to this year are at a higher figure, and, secondly, this year will see a full collection under Schedule A, whereas, owing to the introduction of the instalment system, only one-half was collected last year.
Now what am I to do about Income Tax? The Committee knows that a Royal Commission has been appointed to investigate Income Tax and Super-tax and all the problems to which they give rise. It was recognised before the War that the time had come for such an inquiry. The higher rates—we thought the rate of Income Tax high then—had increased the anomalies of the tax and rendered greater any hardships which were endured. But, of course, the pre-war rates were nothing compared with the post-war rates. Accordingly, all the old anomalies and grievances pressed more urgently for consideration and new ones were created by the circumstances of the War. I therefore appointed a Royal Commission as soon as I could after entering upon office. I do not know what the Report of that Commission may have in store for the taxpayer or the Chancellor of the Exchequer. The taxpayer, I imagine, views it with hope; the Chancellor of the Exchequer looks forward to it with foreboding. Whatever may happen, they are likely—I think they are certain—to propose great changes and great changes are seldom made in a tax without decreasing its yield at the then existing rate. Under the circumstances, I have thought that the wisest course for me to pursue was to make no change in the Income Tax pending the Report of that Commission.

Sir J. D. REES: Double Income Tax?

Mr. CHAMBERLAIN: No change pendding the Report of the Commission, except
so far as may be necessary to carry out special undertakings already given, such, for example, as the exemption from Income Tax of wound and disability pensions and of gratuities payable on demobilisation. On the other hand, in pursuance of the same principle—for what is sauce for the goose is sauce for the gander—I do not propose to ask the Committee to modify this year any of the temporary reliefs from Income Tax or Super-tax, which have been granted from time to time as the result of the War. Whether right or wrong the proposals which I make with regard to the Income Tax are consistent proposals, to be treated as a whole, and I hope that the Committee will accept them as such. I think they may be encouraged by the thought that Lord Colwyn, the Chairman of the Royal Commission, hopes that the Commission will be able to report in time to enable effect to be given, if the House so wills, to their recommendations by the Budget of next year.

Orders of the Day — FINAL BALANCE SHEET.

Mr. CHAMBERLAIN: I am now able to summarise the result. In a full year I should obtain, by the changes in taxation, £103,950,000, derived, as to £60,000,000, from Inland Revenue, and as to £48,950,000 from customs and Excise, thus almost exactly meeting the deficit of £114,000,000, which I calculated we shall have to face in the future normal year. In this calculation I took no credit for the normal growth of the yield in revenue. On the other hand, I allowed very little for the normal growth of taxation. I set the one against the other. But it must be remembered that social and industrial changes now in progress, if by lessening the return on capital they restrict the accumulation of wealth, may eat into the yield of the direct taxes, and especially of the Super-tax and the Death Duties. Again, the £50,000,000 of the £114,000,000, which are attributable to the continuation of the Excess Profits Duty, are avowedly intended only to be temporary and must be replaced from some other source, unless in the meantime we find relief from our burden in other ways.
In the current year I estimate an additional revenue of £41,450,000 net. The final balance-sheet for 1919–20 will thus be:
Expenditure, £1,434,910,000;
Revenue, £1,201,100,000;
Deficit to be borrowed, £233,810,000.
On this basis the gross debt on 31st March, 1920, will be increased from
£7,435,000,000 to £7,669,000,000, or, if we take the round figure of £250,000,000 as the new borrowing, to allow for a margin of error, £7,685,000,000—still substantially less than the figure of £7,980,000,000 which we thought last year might be the total on the 31st March now passed. Against these future liabilities we shall hold special assets in the shape of loans to our Allies (£1,668,450,000), loans to our Dominions (£196,890,000), and a further contribution from India of £30,500,000, making together a total of £1,895,840,000. Or, if I follow the calculation of my right hon. Friend of last year, who reckoned the Allied debt to us at half of its amount: Loans to Allies, £834,225,000; loans to Dominions, £196,890,000; and Indian contribution £30,500,000, giving a total of £1,061,615,000. There will be, in addition—I do not forget them—the German indemnities, and so much of the remaining assets acquired out of Vote of Credit and of the arrears of existing Excess Profits Duties still outstanding on 1st April next as is not required to meet the abnormal expenditure of that year caused by the overlapping of war conditions. The estimated balance of the Vote of Credit assets, as I have already stated, is £350,000,000, and the arrears of the existing Excess Profits Duty £100,000,000.
I thank the House for the patience with which they have heard me. I have now completed my immediate tasks. I have endeavoured to give the House as clear a picture as is yet possible, both of our present position and of our future prospects. I have had to urge upon the House, as I may have to urge again and again, the necessity for severe economy in national and individual expenditure. I have no hope of any reduction in expenditure unless we in this House show an example. I have had at the same time to impose further large burdens upon the community. I cannot hope that in the discharge of either part of my task I shall earn popularity. But in one point I find satisfaction. I am grateful that it has fallen to my lot to make the first proposal in this House for the statutory embodiment in our financial system of that policy of Imperial Preference with which my father's name and fame will be for ever linked.

Motion made, and Question proposed,

Orders of the Day — TEA (CUSTOMS).

1. That on and after the second day of June, nineteen hundred and nineteen, in lieu of the existing duty of Customs the following duties of
Customs shall until the first day of August, nineteen hundred and twenty, be charged upon all tea imported into Great Britain or Ireland (that is to say):

s.
d.


upon all other tea shown to be the growth of a British Possession
the pound
0
10


upon all other tea
the pound
1
0

And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

Mr. ADAMSON: We have had a very full and a very interesting statement from the Chancellor of the Exchequer in introducing his Budget this afternoon. At the same time, I am bound to confess that, from the point of view of labour, in certain respects the Budget statement is of a very disappointing character, and will leave the right hon. Gentleman and the Government open to a considerable amount of criticism both in this House and in the country. I desire, however, to temper my criticisms with a sincere expression of commiseration for the Chancellor whose unhappy fate it has been to provide the first instalment of the terrific obligations imposed upon us by the extravagance, and in certain respects the incredible folly of our spending departments during the War period. But something more is necessary than a mere expression of sympathy. We require both by criticism and helpful suggestion to assist him in finding a considerable portion of the money that will be needed to meet our obligations by a method more just and more productive than that which he has outlined to the Committee this afternoon. The first point of criticism which I desire to make is with reference to the fact that, notwithstanding that the War is over, the right hon. Gentleman has still found it necessary to budget for, roughly, £1,500,000,000. I am not unmindful of the fact, as he himself stated, that this is an abnormal Budget. It is in certain respects a War Budget. But at the same time I think that, with care, and with the application of business ability by our various Government Departments, the right hon. Gentleman would not require to budget for roundly £1,500,000,000 this year, and the fact that he is budgeting for this large sum creates a very serious position for the industry of the country. Taxation can only come out of the wealth produced by hand and brain, and the whole future of the country depends permanently on the development, to the fullest extent, of our industry, our agriculture, and our trading. The Government
should be making extreme efforts to get rid of at the earliest possible moment all sources of excessive expenditure, thereby removing the burden of taxation to a certain extent from the industries of the country.
There are three items, as the Chancellor specially mentioned himself in the course of his statement, namely, the Civil Service and the Army and Navy Estimates, where the total amount required for the ensuing year is, roughly, £1,000,000,000. Surely, if the Chancellor is to keep a watchful eye, there should be substantial opportunities for reduction in these three particular Departments. Many of the offices that have been created were purely for war-time purposes, but evidently there is a tendency, notwithstanding that the War has been finished, and mainly because temporary Government servants may be reluctant to give up lucrative positions, to keep these offices in operation. That is a condition of affairs which neither this House nor the country can tolerate, and the utmost pressure must be exercised both on the Chancellor and on the Government to take immediate and drastic action with a view to reducing expenditure in these directions to a more reasonable figure. The next point of criticism I have to make is to be found in the fact that the Chancellor proposes to meet his excess of expenditure over income by contracting fresh loans and thereby adding still further to our national indebtedness. There may have been reasons for meeting the excessive expenditure during the War by loans, but surely, now that we have reached peace-time, there is no excuse for thus continuing it. The Committee knows that the money is in the country, and there are many of us who believe that the Chancellor would have been well advised to have taken his courage in both hands and to have found the money without the necessity for further additions to the National War Debt. As a matter of fact, there are some of us who believe that the Government ought to have to a much larger extent found the expenditure as they went along during the war-period, and unless the Chancellor is courageous enough to take this line, I fear that it will lead to a considerable amount of dissatisfaction and criticism. There is another point to which I want to draw the right hon. Gentleman's attention. It is the one in which he informed the Committee that there is to be a very substantial reduction
in the Excess Profits Tax. If I understood him aright, I think he led the Committee to believe practically that at the end of the present financial year there is a likelihood of this tax being abolished altogether. So far as Labour is concerned, they protest strongly against any alteration of this kind being made, particularly at a time when the Chancellor is unable to meet his obligations without adding to the national indebtedness.
A further point with which I wish to deal is one in which the right hon. Gentleman himself evidently takes a considerable amount of pride, namely, the question, of Colonial Preference. It is perfectly true that to a considerable extent he is giving effect to it in a negative way, rather by reducing the existing import duties than by creating new tariffs or adding to the existing tariffs. But, in our opinion, whether it be in the way he has suggested or whether it be accomplished in the positive sense, it is a proposition we look upon with grave concern, for we are strongly of opinion that this is the thin end of the wedge, and that it is the beginning of the setting up of tariff walls in this country. We have been led to believe that the establishment of the League of Nations, which includes a Labour charter, would to a considerable extent break down the tariff walls that have existed between the one country and the other in the past. We have been encouraged to hope, by statements even by members of the Government, that this idea of ours would be realised, but evidently the Chancellor of the Exchequer—and I take it he speaks for the Government in putting forward this new change in the method of dealing with the duties—is not convinced of the efficacy of the idea that what the League of Nations is bringing about will result in the way we have anticipated. My next point is that the Chancellor still seeks to continue the excessive burden of indirect taxation which boars so heavily on the working-class population of this country. As a matter of fact, he makes provision in this Budget for increasing the indirect taxation instead of reducing it.

Mr. CHAMBERLAIN: I am not increasing the charge except in the case of the consumer by bottle or cask.

6.0 P.M.

Mr. ADAMSON: I am rather looking at what is likely to be the effect of the Chancellor of the Exchequer's proposal and to what his intentions are. As I view his proposition, he is rather increasing the
indirect taxation than lowering it. [HON. MEMBERS: "How?"] He himself has stated that on a certain article so much increase will be put. I believe the effect will be the same on other articles. If those hon. Members who are putting questions to me across the floor will restrain themselves, they will have an opportunity of replying to any statement I am making regarding the speech of the Chancellor of the Exchequer. Economists tell us that there is no calamity to a nation so great and of such lasting injury to the well-being of a people as a general lowering of the standard of life of the large majority of the folks who live on weekly wages. We of the Labour party strongly maintain that indirect taxation should be levied on persons whose incomes fall below a reasonable Income Tax standard, say, of £250 per year, only on such articles as may be described as luxuries, with some of which the Chancellor has been dealing in the elaborate statement he has given to the Committee this afternoon. Those are the points of criticism I desire to make regarding the Chancellor of the Exchequer's statement.
I desire now to pass on to him what I think will be a few helpful suggestions with a view to raising the money necessary to meet the obligations of the country under the present conditions by a more just and productive method than he himself has suggested. May I preface my remarks on this head by warning the Chancellor of the Exchequer and the Government that Labour will not continue to carry the present excessive burdens, both of direct and indirect taxation on a small income, that will be necessary to enable us to meet our obligations along the lines suggested by the Chancellor of the Exchequer when those who have so flagrantly exploited the national credit and resources by their profiteering activities during the War remain in comparatively undisturbed possession of their unpatriotic gains? Just before the Easter Recess my hon. Friend the Member for North Aberdeen (Mr. Rose) pursued some inquiries by means of questions in the House. He was concerned with the difficult problem of trying to trace some of the vanished millions for which the Chancellor of the Exchequer is now called upon to find security. Questions of this character are not very fruitful of satisfactory results, but my hon. Friend elicited at least valuable information
regarding certain items, one of which I now invite the Chancellor of the Exchequer to study. My hon. Friend was able to demonstrate that one great firm of munition contractors, made passing rich by fat contracts, watered its capital to the extent of three times the original value, namely, £1,000,000 to £3,000,000, and in a very short time thereafter the concern changed hands and came into the possession of a second firm at no less a sum than £15,000,000. Our belief is that all these sums in excess of the original £1,000,000 represented excess profits upon which the duty was not levied, and that these manipulations were designed for the purpose of evading the Excess Profits Duty. We claim that this is not an exceptional instance. It is rather typical and illustrates the shameful way in which the necessities of the country were exploited, during the War time. We are strongly of the opinion that by the method I have already nentioned, and by other dark and devious ways, the War munitions contractors have appropriated something amounting to a very large sum of money in excess of the very liberal statutory profits laid down by the War Munitions Act, 1915, and that they have in this way been allowed to tax the nation. In demanding in the name of Labour that the profiteer shall now be called upon to disgorge most, if not all, of these excess profits, we urge the Chancellor of the Exchequer to go closely and keenly into this matter, being convinced that if he does so he will get a considerable sum of money that will enable him to meet some of the obligations of which he has been telling us this afternoon and restore the balance of justice as between one section of the citizens of this country and the other, and, at the same time, will strengthen the confidence of his fellow-countrymen both in himself and in the Government he represents.
The next suggestion I would pass on to the Chancellor of the Exchequer for his consideration is that we want the Government to develop the productiveness and serviceableness of every part of the public domain. We want a rich and prosperous Exchequer, not a starved and bankrupt one. Let me take one illustration from many. We want the Post Office to develop its profitable business in all directions, and not to stop short in its activities where it enters into competition with bankers, railway companies, carriers, or remittance houses. We want the Government rapidly to develop the super-power stations that
are to give electric heat, light and power, and we want them to own and develop the transport services of the country, to own and develop the mining industry. Such essential national services as these should be exploited for the whole of the people, even if this means that there are fewer opportunities for piling up private fortunes. Even if these two sources of Revenue which I have briefly discussed with the Committee and the Chancellor of the Exchequer were exploited to the fullest extent, I do not suggest that they would provide money sufficient to enable the right hon. Gentlemen to meet his obligations. The next suggestion I make to him is that, instead of following the policy he has outlined to-day, he should endeavour to raise part of the necessary money which he requires by a system of graduated Income Tax, beginning after an Income Tax standard of £250 has been exceeded with a small payment of one penny in the £, and going on by well-balanced stages until we reach a very substantial Income Tax in the cases of those whose incomes range from £50,000 to £100,000 and over per year. There is another suggestion which I have had passed on to me by a correspondent, for which I take no personal credit, but which I now give to the Chancellor of the Exchequer, as I think it is worth his consideration. My correspondent makes the following suggestion:
That every person, firm or company at present liable to pay Income Tax should be compelled to make a return showing their assets on 30th April, 1914, and on 30th April, 1919. The State to take 80 per cent. of any increase over the first £1,000. The amount so taken to be ear-marked for the reduction of the War Debt. Time for payment would be given. This would only take from those who have made money out of the War and there is a fair number of such persons.
Even after all these things have been exploited, I believe that the terrific obligations that face the country, and whoever occupies the position of Chancellor of the Exchequer in the future would not be met unless, as the Chancellor of the Exchequer has proposed this afternoon, our people are to continue for a few generations to go on carrying an enormous financial burden upon their shoulders. I do not think, knowing the temper of our people as I do, that they are in a mood to continue to carry generation after generation the excessive burden that they will be called upon to bear if we simply follow the lines marked out by the Chancellor of the Exchequer this afternoon. Notwithstanding
the very emphatic statement he has already made on the question of a levy on capital, he would be well-advised to explore thoroughly the possibilities of this suggestion. I need hardly say that it is not specially an invention of the Labour party. It is an expedient to which those who are facing squarely the alarming financial situation ahead of us—bankers, economists, and serious politicians of all kinds—have for some time been considering. It has even had some consideration by the British Exchequer. The Leader of the House, when he was Chancellor of the Exchequer, gave some consideration to this matter, and, while he objected to imposing a levy on capital during the progress of the War, at the same time said that it was a matter that might have to be seriously considered when the War was over. If the question of a levy on capital is to be considered, I would suggest that it should be done on the same principle as I have Already suggested should be given effect to in regard to Income Tax, namely, that it should begin from a figure that would leave to the possessors of the wealth an income of £250 on their capital, and from that point it could begin at 1 per cent. and, by well-defined stages, go up to a substantial proportion in the cases of the possessors of millions of pounds. If that were done, I very humbly suggest to the Chancellor, it would yield to him a very much larger amount of money than the increase that he has suggested should take place in the course of his speech this afternoon. I know that there are serious objections taken to a suggestion of this kind. The Chancellor has given expression to them. For instance, he discussed the possibility of the putting into operation of a tax of this character and the effect on the selling value of our national securities. He even pointed out that there would be so many securities on the market that there would be no buyers. I think that objection arises from a misunderstanding of the proposal. If this suggestion were given effect to, the tax would be paid in stocks and shares and securities of other kinds, as well as in money. In the second place, it has been said that a levy of this kind would cut down the capital of the country when it is most needed. There, again, I think, there is a misunderstanding. The levy would not cut down the capital; it would merely transfer the title-deeds, or the ownership of it, from the individual to the
Government. Again, it is suggested that a levy of this kind is in the nature of a repudiation of our debt. That is not true. The citizens of the country are in any case jointly liable for the State debt. There is no essential difference in asking them to pay off the debt with a portion of the capital, than there is in asking them to pay off the interest of that debt out of their income. The financial situation that faces the people of this country at the present time is a very serious one. So far as the Labour party are concerned they are under no illusion as to the position. They do not believe that our obligations can be met by any fanciful methods, such as the printing of more paper money or the magical provision of universal bank credits or Labour notes, or any other fanciful ideas that we hear given expression to from time to time. Neither do any of the responsible men in the party believe in the repudiation of the National Debt. We believe that our obligations will have to be met by one form or another of taxation on the individual. That taxation we suggest ought to be levied in such a way as to enable it to fall justly and equitably on all sections of our people in accordance with their capacity to bear it. We do not think that the manner outlined by the Chancellor this afternoon fulfils those conditions, and consequently we hope that we will be able before the Finance Bill passes through all its stages to make substantial alterations which will enable us to give fuller expression to the principals of equity and justice than the policy outlined by the Chancellor of the Exchequer.

Sir S. ROBERTS: I do not wish to pursue the subject which has been referred to by the right hon. Gentleman, and which the Chancellor of the Exchequer, I think, dealt with very fully in his speech. The Chancellor commenced his speech by asking the sympathy of the House in his difficult position, and the cheers which he received when he sat down will satisfy him, I think, that he had the sympathy of the House. The right hon. Gentleman in his very lucid address instituted a comparison as to the amount of revenue and our contribution towards the expenditure. We are practically the only people who have to a substantial extent been taxing ourselves during the War. I think the people of the country sometimes do not realise the amount which has been raised by taxation.
The amount of tax revenue has increased since 1915 by four times, and last year represented 34.4 per cent., or for the four years 1914 to 1918 the percentage was 26.9. The Chancellor for last year estimated it would be 28.3 per cent. Excluding the Excess Profits Duties, direct taxation contributed 67.5 per cent. against 54 per cent. in the year 1913–14. The Customs and Excise revenue has about doubled since the first year of the War, and now amounts to £161,000,000. The Income Tax and Super-tax now total £291,000,000 as against £69,000,000 in 1915. The Leader of the House, when he was making his Budget statement last year said—and perhaps the Financial Secretary will draw the attention of the present Chancellor to the words—
Every Chancellor of the Exchequer, I think almost everyone, is inclined to be tempted by the facility with which revenue can be raised by this tax (Income Tax). It is only a case of taking a decision and immense sums come in. I do not think it is right to be too much influenced by that consideration. I think the House of Commons and hon. Members in every quarter of it should take into account seriously what is the effect of an Income Tax on anything like this scale, not only on the individuals who have to pay it, but on the whole trade and industry of this country. I should have been glad if it had been possible to leave it at 5s., but that is impossible, and I propose to increase the rate of Income Tax by 1s. and make it 6s. in the£.
I think those are very wise words, and I hope that the Commission which has been appointed to consider this question will take them into consideration. The total Revenue is contributed, as to about 67 per cent., by a small class of the population in Income Tax, excess profits, and estate duties. This class is estimated at about 2 per cent. of the population. In other words, 2 per cent. of the population bears about 67 per cent. of taxation, without counting any consumption of articles indirectly taxed. Is it good for the State that taxes should not be shared by a large majority of the population?
I want to make only two remarks on the present taxes. When the Super Tax was first put on, the point was raised in this House, but it was not so important then when the amount of Income Tax was so small. Now, however, it is an important anomaly. Take an income of £5,000 a year. The Income Tax at 6s. is £1,500, which reduces the individual's income to £3,500, but, instead of charging Super Tax on £3,500, it is charged on the full £5,000, making the Super Tax £287 10s., or £125 more than it ought to be. It is felt to be
an injustice, and I hope my hon. Friend (Mr. Baldwin) will make a note of it and see that it is brought before the Income Tax Commission. With regard to the extra penny duty on cheques, the right hon. Gentleman congratulated himself and the Committee that that tax had brought in double—£1,500,000. According to the Report of the London clearings, this extra penny has made little or no reduction in the number of cheques passing. My experience in the country has been the reverse. I happen to be chairman of one of our country banks, and we had an examination of the number of cheques of £5 and under paid during the month of December, 1917, and then we took the same month in 1918, and we found that there was a decrease in the latter year of 12 per cent. at the head office, 13 per cent at one of our large country offices, and over 20 per cent. at an important local branch. My suggestion is that, although the revenue from this tax is satisfactory, it is not satisfactory from the point of view of inflating the currency.
The Chancellor of the Exchequer told us that there has been a very large increase in currency notes from March last year to March this year. They have gone up by no less than £100,000,000, and I see, according to the last record on 23rd April, they were no less than £349,000,000. I do not myself regard these Treasury currency notes with the alarm that some people do. I do not think they are responsible for what is called inflation of prices. I think that the currency notes have been issued to meet the demand. In my view the increases in prices and wages have arisen simply through the operation of the natural law of supply and demand. The War caused a shortage of men for labour, and commodities were also scarce. At the same time the Government commenced to borrow money. What was the natural result? There was more money to pay in wages and less labour to receive the money, and there were less commodities. The law of supply and demand must, of course, operate in conditions like those. We must not blame the Government for the issue of currency notes. These notes are only issued by the Bank of England on demand from the banks, which have to pay value for them.
There is only one more point I want to mention, and that is with regard to borrowing. During the War, fortunately, it has been a habit for all classes of our
people to save and invest in Government Loans. It is a very wholesome doctrine, and a great security to the State to have a great majority of its citizens, estimated at 17 millions, holding Government securities. I think it is a safety valve. I know my right hon. Friend is not of the opinion that investment in these securities is not now necessary. We want money largely, not only for winding up the War, but for all the developments, such as housing, transport, pensions, and many other things. My advice to the Chancellor is that he should do all he can to continue this short borrowing, say, for periods of five or ten years. I think he would be well advised to alter the term "War Bonds" to "National Bonds," because we all hope that the War is over, or will be over when peace is signed. These bonds are a security which yield over 5¼ per cent., including premium on redemption. That is a much better thing to invest in than speculative concerns which promise 7 per cent., 8 per cent., or 10 per cent. which have not security of capital. People of smaller means who are able to save money ought to invest in an absolutely first-rate security, and this is one of them, because the individual is perfectly certain of getting his capital back with some premium in addition. As the sale of these War Bonds seems to be falling off, the Chancellor of the Exchequer should make it his business to see if he cannot make them even more attractive, because this borrowing, which has been so very successful, should be continued. The right hon. Gentleman, in his instructive speech, said that, after all, the prosperity and success of this country must depend upon two things—and I am absolutely with him—namely, economy both in Government Departments and in the individual. If these two things are carried out, and if the right hon. Gentleman will put up a stiff back to the Government Departments, and say "No, I will not allow you to spend this money. I will not allow an office to have more officials in it with high salaries than it ought to have"—if he will strengthen himself in that way, I am perfectly certain this Committee will back him up and thank him for his services.

Sir J. WALTON: I desire to offer my warmest congratulations to my right hon. Friend the Member for West Birmingham on having assumed the most important
position of Chancellor of the Exchequer. I do this because twice over, in the House, in the last eighteen months, I have urged the Leader of the House that no super-man could properly discharge the duties of the Chancellor of the Exchequer, a member of the War Cabinet, and Leader of the House of Commons, and I have urged that he should call to his assistance, if possible, my right hon. Friend to resume the duties of Chancellor of the Exchequer. Therefore I take special interest in his first deliverance to-day, and I only regret that he is not in the same happy position that he was in 1905, when he delivered his previous Budget speech. In that year the income and expenditure were just about £150,000,000, and he was able to remit taxation. To-day he has to provide for an expenditure multiplied tenfold—£1,500,000,000. The occasion of the first introduction of the Budget is not one for going into details about the various changes of taxation imposed. In my opinion, that will be better done tomorrow, after those proposals have had more consideration. But to-night we may deal suitably with some of the main questions in the position, financially, that is confronting us. We know that the expenditure for the current year is estimated to be £1,435,000,000, and it was amazing to find that the Chancellor of the Exchequer is going to provide a revenue of £1,201,000,000 this year against that expenditure of £1,435,000,000 and only have a deficit of £233,000,000. That is highly satisfactory.
But I do not consider that the £200,000,000 he put into this £1,201,000,000,to come from the sale of war material, ought to be considered as revenue of the year. I think it rather stands in a different category. However, it does reduce our national indebtedness by £200,000,000, and with £233,000,000 to borrow from this year's expenditure, we come to the next question of the short-dated obligations that are confronting us. These include the £986,000,000 of Treasury Bills—all to be paid in the course of the current year—the provision of £455,000,000, Ways and Means balances, and the payment of Exchequer Bonds to the extent of £247,000,000 which come due very soon. In another place the figures were given about a month ago, and it was there stated that before the end of the current financial year we have short-dated obligations to be met amounting to £1,758,000,000. Since that
statement was made, £86,000,000 of Treasury Bills have been taken and £28,000,000 more added to Ways and Means balances. That makes a total of £1,872,000,000 of short-dated balances that are to be met within the current financial year. Add to that the £233,000,000 deficit on the current year that must be raised by borrowing, and what do we find? We find, to me, a very alarming result, namely, that in order to square the accounts up to 31st March next we require to borrow on War Loans, or to find in other ways, £2,100,000,000. That comes upon all our previous borrowings. Fault was found with the Chancellor of the Exchequer for issuing a new series of War Bonds at 5 per cent. That was an absolutely wise proceeding on his part, and for this reason: Now that the War is over and great industrial developments are taking place, industrial firms are offering 6 and 7 per cent. for extra money to undertake those developments. The fact that the Chancellor of the Exchequer did not offer too good terms is shown by the fact that in the twelve weeks in which those new 5 per cent. War Loan Bonds have been on sale only £49,000,000 have been taken up—a little over £4,000,000 a week. That shows that, at any rate, the public does not consider for one moment that the Chancellor of the Exchequer is offering too much. On the face of it it looks an uncommonly good investment. It is a Government security of 5 per cent! But the lender does not get 5 per cent. The Government gives 5 per cent. on the one hand, and, on the other hand, large lenders have compulsorily taken from them 6s. in the form of Income Tax and 4s. in the form of Super-tax, or 10s. in the pound. That, taken in the form of war taxation by the Government, means that they lend money—that the man who has enough money to sport with—lends to the Government and gets 2½ per cent., and no more. I think the sooner the whole nation realises facts of this sort the better, otherwise it may come to be said that the lending of money the Government is turning men into 5 per cent. profiteers. It is doing nothing of the sort.
We have heard a great oration to-night from my hon. Friend the chairman of the Labour party (Mr. Adamson). I do not know whether or not we shall see him in the position of Chancellor of the Exchequer in a Labour Government standing at this Table and working out some of the problems with which he dealt to-night.
I was interested in his speech, but, at any rate, in his attack on the Excess Profits Duty he could not be attacking the coal-owners. He knows perfectly well that they have not only paid 80 per cent. in Excess Profits Duty into the Treasury during the last two years, but they have also paid a levy of 15 per cent. more into the Coal Controller's Financial Department. Therefore, anything they have got is a mere 5 per cent. I do not think the colliers ought to grumble, for if the coal-owner gets 5 per cent. extra there is the very substantial increase in wages over pre-war wages that they themselves have got. The miners really have got more in proportion than have the coal-owners. No charge of that sort can be made in regard to Excess Profits Duty, at any rate, against the coal-owners whose interests I am supposed sometimes to advocate in this House. The question to my mind—and I should like the Chancellor of the Exchequer to have dealt with it—is: How are we, between now and March next, going to raise £2,100,000,000 by some longer dated loans? That is a problem of a very serious character. I am sorry my hon. Friend below (Mr. Baldwin) was not here a few moments ago. He is such a keen economist. I will refer to one or two other matters for his especial benefit. I should like information on several points. We have a National Debt now amounting to £7,686,000,000. We owe outside the United Kingdom £1,300,000,000. In round figures £1,000,000,000 are due to the United States of America. I am very anxious about that. What arrangements are the Government making for the discharge of that liability? We have to pay interest on that £1,000,000,000.
What are the arrangements to pay principal as well as interest—because it is a huge amount that we must find to discharge that liability to America? We have also £1,700,000,000 in loans to our Allies and the Dominions. When is any payment coming to our Exchequer either for interest or principal in regard to the £1,700,000,000? We have, therefore, for the time being—I think my hon. Friend may well agree with me in this—to finance not only the £1,300,000,000 we owe outside these Islands, but also the £1,700,000,000 we have lent to our Allies and the Dominions. I assume these amounts are all included in the total, £7,685,000,000, which was stated to-day to be the gross amount of our
National Debt. That is so far satisfactory, but I should like to have heard something more on some of these points. Like, however, his predecessor, the Chancellor of the Exchequer to-day made no reference to the necessity of full Treasury control being exercised over national expenditure. We know perfectly well that Treasury control lapsed almost altogether during the War. It was admitted that the great spending Departments spent pretty well as they pleased—whether it was the Ministry of Munitions, the War Office, the Admiralty, or the Air Board.
Our financial system in this country rests upon the doctrine that the interests of the taxpayer in limiting expenditure should not be left to the Minister at the head of a spending Department, but should be in the special charge of another independent Minister, namely, the Chancellor of the Exchequer, working through his own Department, the Treasury. I ask my hon. Friend (Mr. Baldwin), When does the Treasury propose to resume full and proper control of the expenditure of this country? There was a statement in the "Times" newspaper of yesterday in regard to Air Board contracts. I should like to have my hon. Friend's attention to this point. We are told in this statement there were certain contracts made by the War Office in connection with the construction of aerodromes. The Air Board took them over. Those contracts were on a percentage of profit on the cost to the contractor. The Air Board took them over and immediately procéeded to give the contractors a higher price. The increase amounted to £66,000, because, they say, the contractors were not taking a proper interest in the work they were carrying out. The Treasury very properly made very strong comments upon this waste of public money. But this waste was only brought under their notice by the Comptroller and Auditor-General, and applied to the year 1917–18. It was, therefore, too late to retrieve the loss. The Committee on National Expenditure very strongly recommended that not only should we have the benefit of the supervision of all expenditure by the Public Accounts Committee which, after all, only deals with irretrievable waste—because it is always a year or two after the waste has taken place that it is brought to the notice of the House, but that Estimates Committees should be appointed to go through the Estimates before they are laid before
the House in order, if possible, to effect economies in the Estimates. I should like to know from my hon. Friend why the Estimates Committees recommended by the Committee on National Expenditure have not been appointed. My right hon. Friend the Member for the City of London (Sir F. Banbury) has undertaken the Chairmanship of the National Expenditure Committee, and I presume that that will to some extent take the place of the Estimates Committees that have not been appointed. But we want every possible assistance if we are to get economy exercised in the expenditure of the country.
In this statement in the "Times"—I dare say hon. Members have seen it—I find that the Treasury write a strong remonstrance, and it is stated that both the Admiralty and the Air Board on their own initiative, without any sanction from the Treasury, had extended an award of a 12½ per cent. bonus to work done in Ireland which it was not intended to apply.

Mr. DEVLIN: Why?

Sir J. WALTON: I knew I should have that query, but I am not criticising the 12½ per cent. being extended to Ireland; I am merely stating what the communication says. I think it should be given to Ireland quite as well as to any other part of the country.

Mr. DEVLIN: Not at all—Ireland should not be treated the same as other parts of the Kingdom!

The CHAIRMAN: The hon. Baronet is diverging on to the expenditure of the year. We are in Committee of Ways and Means, to consider the raising of taxes. The discussion of expenditure is not in order now.

Sir J. WALTON: Am I not in order, Mr. Whitley, in urging Treasury supervision and control over expenditure?

The CHAIRMAN: Yes, but not in going into specific cases.

7.0 p.m.

Sir J. WALTON: I am sorry, but this case happened to be in the paper yesterday. It was such a very cogent one that I had forgotten that I must not refer to specific instances. I may, perhaps, however, be allowed to urge that greater measures should be taken to restore Treasury control over national expenditure, and to save the enormous waste which is taking place.
There is another question I should like to ask the Chancellor of the Exchequer. We have had no definite information as to whether any payment whatsoever has been received from the German Government, either as payment for food supplies or towards the expenses of the Army of Occupation. The taxpayers of this country are being subjected to an enormous burden of taxation through the wicked and unprovoked aggression of Germany on the rest of Europe. I hold a very strong view that the British Government should use every possible effort to extract, as early as possible, large payments from Germany for the relief of the British taxpayer, and towards this huge debt of £7,685,000,000. The Germans, when they thought the tide of victory was with them, openly declared that they would make England pay £10,000,000,000, and lay her under tribute for a generation. I think it would be a very good thing to know from the Chancellor of the Exchequer what prospect there is of early payments from Germany. Perhaps it is premature to ask him to tell us the amounts of those payments, but so far as we know no money, either for reparation or any other purpose, has yet been received from that country. The question of the increase of taxation is certainly a serious one. In 1914, the pre-war taxation of this country was £3 10s. per head of the population; now it is nearly £17 per head. That certainly shows the necessity for very great vigilance and for a making vastly greater efforts to prevent the waste of public money. I wish to put a question with regard to what I think I am almost right in regarding as unconstitutional taxation which has been given effect to recently.
We passed a Coal Control Bill through this House, and when it was being passed it was agreed that no money should be taken from the taxpayers in connection with that measure without a Financial Resolution first being introduced into the House and a Bill being passed to sanction it. But how was this evaded? The Coal Controller instructed the collieries to charge the consumers throughout the country half-a-crown more per ton for coal. This realised £25,000,000, about £20,000,000 of which went to the Treasury and about £4,000,000 into the coffers of the Coal Controller. That was outside the Budget and the purview of Parliament, and was done without the sanction of Parliament. I should like to know from the Chancellor of the Exchequer whether he
is not inclined with me to regard that as unconstitutional taxation. There was a distinct understanding, and an agreement, embodied in the Coal Control Bill, that this should not be done in connection with that Bill. I bring this forward because I think the Chancellor should consider it and should protect the taxpayers of this country from similar evasive methods of increasing the demands upon them, for, seeing that the Treasury got nearly £20,000,000 of this money, this was only another method of taxation. Lastly, I would refer to the estimate of the Chancellor of the Exchequer as to what the expenditure will be in a normal year after all war expenditure has ceased. He estimated it at £766,000,000. He admitted that it was very difficult to make an estimate, for instance, of what we should spend on the Army and the Navy and the Air Service, which he put down at £110,000,000. I am afraid that our Army, Navy, and Air Service, after the War is completely over, will cost us a good deal more than £110,000,000, and I shall be thankful if, in my lifetime, we see a Budget under a total of £900,000,000 or £1,000,000,000. What about the £100,000,000 lost in working the railways under Government control? I do not see that provided for in the Budget. This loss has to be paid by the taxpayers of the country, and the same thing will apply in other directions, unless Government interference and control are put an end to pretty speedily. If, as a nation, we are to have economic recovery and industrial prosperity, they will only be obtained by the earliest cessation of all Government interference and control. This is doing great harm and is hindering our economic recovery at a time when the financial position is such that it is only to be met by increased production and trade. I am perfectly certain, however, that the Chancellor realises, quite as strongly as I do, the necessity for this, and that we may count on his assistance, and the assistance of the Financial Secretary, in reducing national expenditure and in saving waste—for instance, in the great public Departments, where the staffs could probably be reduced by one-half to-morrow with advantage, and in several other directions.

Mr. JESSON: I confess I was deeply interested in the speech of the Chancellor of the Exchequer this afternoon. I also confess that I was very much bewildered by the enormous figures which he dealt
with. Like a good many others, during the War I was deeply interested and concerned by the steady piling up of the load of debt on to the back of the nation, and I wondered, not so much about the load of debt itself, as about the way in which it was going to be repaid, together with the obligations which we were incurring during the War. I realised that unless we could find some other method of repaying this gigantic sum of money than by the pre-war methods of taxation it would mean that those boys who had done all the fighting in winning the War, and had made all the sacrifices, would be heavily taxed when they came home again on purpose to pay for the War. That, to my mind, is an almost impossible position, and, like others, I have tried to think out whether it would not be possible to find some other means of meeting this gigantic load of debt and at the same time of relieving taxation very considerably. With all humility, I desire to make certain suggestions to the Chancellor of the Exchequer on these lines. In doing so, I do not propose to deal with any chimerical or Utopian scheme. My proposal is to call attention to certain facts already in existence, and to draw certain deductions from those facts. We are all agreed that the only way in which we can pay this load of debt and meet our obligations honourably is by increasing our annual production of wealth.
What do we mean by an increase in the annual production of wealth? I am gong to deal with this, not as a financier or as a business expert, but as I conceive the man in the street would deal with it. What the average man in the street, when you speak to him about an increase in the production of wealth, means is this: "We require more food, more clothes, more houses; we require insurance against sickness and unemployment; we require a pension of 20s. a week at 60 years of age." In addition to all that, what the man in the street also requires is more holidays, and a reduction in the hours of labour, so as to enjoy some of the good things of life, and also means of recreation, education, and leisure, and travel, and all that kind of thing. I think that would be considered a fair charter for the average man in the street. It is obvious that we cannot enjoy food that has not been produced, neither can we wear clothes that have not been made, nor live
in houses that have not been built. Above all that, it is impossible to enjoy all those things in greater abundance and at the same time to reduce the hours of labour and to make provision for old age unless we get an absolute free use of all kinds of labour-saving machinery. I think that is a fair statement of the position. It also means that before we can get an increase in production we have to have a better understanding between capital and labour, and a more friendly point of view. In pre-war days, and I speak as a trade union official, the position between employers and employés was something like this. The employing class tried to get as much labour out of the workers as they possibly could, and to give in return as little wage as possible. To my mind that was a fallacy, for the reason that the wages that the working classes received in pre-war days, and which only averaged about 25s. a week, were not sufficient to enable them to buy back the produce of their own labour. The result was that we had disorganisation and unemployment. That has got to be got rid of. There are even employers to-day who have not realised that their employés are not only workers but potential customers to the tradesmen they supply and to themselves, and that customers who have little or no money to spend are not much good as customers. Therefore we must have an alteration in that. On the other hand, the working classes were compelled to combine because employers in competition with each other were struggling to produce for the cheapest market, and the workers had to combine in their trade unions, not only to protect their own interests, but also to improve their conditions of life. They had no interest in producing anything more than they could possibly help. In other words, they restricted output because there was no inducement to make extra profit for the employers. That was bad also for production. In addition to that the working classes generally had a great antipathy to the introduction of too much labour-saving machinery, and for the very good reason that under the old conditions of pre-war days the introduction of labour-saving machinery generally ended in the discharge of a good many of the employés, and therefore they feared that too much labour-saving machinery would bring about unemployment, either for themselves or their fellow workers. Therefore, there was
great antipathy to that. That, again, was bad for increased production. That, I hope, has been got rid of for all time.
I am very pleased to know from the statement that you, Sir, made the other night, that there are no fewer than fifty Whitley Councils now established, covering as many industries, and I also understand from you, Sir, that there were twenty-five others in course of formation. That was very great news to me and to my colleagues who were with me on that particular occasion. We thought that was one of the most hopeful signs of the times. What do these Whitley Councils consist of, and what is their object? They consist of an equal number of employers and employés and the object is to try to bring about a better understanding between the workers and the employers. Further than that, they are to agree upon what the rates of wages and the conditions of employment are to be in these various industries. From that point of view they are very useful institutions. When they have arrived at what the rates of wages and the conditions of employment are to be in a given industry it is suggested that they shall be imposed upon the whole of the industry. Further than that, one of the objects of the Whitley industrial council, in which I am interested, is to try to get the various industries properly organised, and to this end all the workers are advised to join their trade unions and all the employers their associations. That is going on at present, and remarkable progress is being made in that direction.
This brings us to a very important point, because when you get the employers all organised we get this position. Almost every day we see the employing classes closing up their ranks on purpose to eliminate the more wasteful forms of competition amongst themselves. Scarcely a day passes but we hear or read of huge amalgamations in different industries taking place, running into millions of money. They are evidently learning the lesson that competition is one of the most wasteful forms of production, and therefore they are closing up their ranks. What we are leading up to is this. We are going to have each industry thoroughly organised, with the workers on one side and the employers on the other. In other words, we are going to have in each industry under the Whitley industrial councils so organised that it is going to be in a position to exploit the consumer. I do
not think there can be any doubt about that. The question arises would they exploit the consumer if they were in that position? Obviously they would. We are told, on no less an authority than the late Sir W. S. Gilbert, that this is a very wicked world and that virtue is triumphant only in theatrical performances. There is a good deal in that. The opportunity for exploiting the public will be greater than these huge combines could resist, and that would mean that the Government would have to step in on purpose to protect the consumer. I think there is nothing far fetched in a deduction of that kind.
I come now to the speculative part of my proposal, as to how the Government could be assisted in raising the money to pay for this debt that the War has left upon our shoulders. If the Government stepped in to protect the consumer my suggestion is that it should pull its full strength; in other words, that it should assist those industries that it steps in to protect the consumer from. That is a very easy and a very natural thing for the Government to do. There are such things as research, foreign markets, raw material, and many other things of that kind which the Government could do to assist production which those trades could not possibly do for themselves. I understand that before the War Germany had a system of trading which is practically unique from the organisation point of view. I am told that the manufacturers of Germany who imported raw material and made it up into finished commodities were not allowed to import their raw material individually. That all had to import it through a Government Department which sent one buyer out into the markets of the world to purchase these raw materials instead of a thousand different competing travellers, distributing them amongst the manufacturers and charging a percentage upon the amount imported. That is a very useful suggestion which would be well applied to the industries of this country when they have been organised under the Whitley industrial councils. If the Government thought it necessary to step in to assist industries in this way they should take a share of the increase in production. In doing that we could well define the line of demarcation between what the Government should do to assist industry, just as we define now in the Whitley councils the line of demarcation between the employers and the employés. I think that is
quite feasible and there is nothing Utopian in such a proposal. If the Government accepted it, I think we should be well out of our difficulty with regard to finding the ways and means of paying our way for the future.
When you have your Whitley councils established you have still to deal with the question of making it worth the workers while to increase production from his point of view. Obviously, it would be foolish to expect that the worker is going to become enthusiastic at the idea of producing so as to make more profit for the employing classes. It will not come off. What I suggest is that the worker should be guaranteed a share of the extra produce accruing, and that could be done in this way. The first charge upon the cost of production should be a proper rate of pay for the workers, from the managing director downwards. The second charge should be the ordinary establishment charges which every industry has to bear and which need no explanation from me. The third would be a fair rate of interest for those who have put up the money which has made the business possible, and after that I would suggest that all extra produce should be divided between the State, to assist the finances of the country, the worker, who should have an extra bonus for extra production, and also the shareholder as an inducement to enterprise. That I do not think is an unreasonable proposal. If we get that position it will solve our financial problem altogether, because it will enable us at least to treble production.
I want to quote figures showing the possibility of trebling production from the point of view of getting the State, the employing classes and the workers to co-operate and to work together instead of pulling against each other as they did in pre-war days. These figures are taken from a book called "Eclipse or Empire." I regard it as one of the most remarkable books published during the War. It gives a list of figures showing the average production in America and in this country in a selected number of industries I only want to deal with one industry. I take the boot and shoe industry of America and this country and compare them. In this country the machinery used per 1,000 persons employed was only 172 horse-power as against 487 horse-power in America. One of the results of that is this: The
average production per head of the people employed in the industry in this country was only £171, as against £516 in America. That is more than three to one, and that practically applies on an average to nearly all the industries in America and this country. I suggest that we could at least equal that. If we did, it would mean this: Our annual production of wealth in pre-war days, according to different estimates that I have read, worked out at something like £2,300,000,000 per annum. I have a leaflet which the London Municipal Society has sent me—I do not know why. They state that the average production of wealth before the War was £2,500,000,000 per annum. Therefore, my estimate is not an exaggeration. If we can treble that, it means £6,900,000,000. In other words, it is an increase of £4,600,000,000 per annum. If the Government only took as its share one-third of that sum they would have no less than £1,500,000,000. These are figures that I am not responsible for. I am simply trying to draw a deduction from these figures. First of all, we want an increase in the production of wealth in order to pay our way, and I have shown how that can be done. I submit that if we have increased production to the same level as in America we can increase our production by no less that £4,600,000,000. If the Government only take one-third of that for their assistance to industry, they will be out of their financial difficulty, altogether irrespective of what money can be raised by other forms of taxation.
I agree that our present form of taxation hampers and paralyses trade. The Excess Profits Duty is a case in point. That does discourage production. Our present form of taxation has a tendency to depress industry and cause unemployment. Take the question of housing. We tax houses on 50 per cent. of their rentable value, and the result is that people live in two or three rooms instead of four, five, or six rooms. That is not only bad for the health of the people, but it is also bad for the builders. You come to the same thing in nearly every industry which is taxed in this particular way. My suggestion is that whatever we tax we depress. I admit that it is one thing to increase production and another thing to find a market for the increased production. That brings me to the question as to what we are going to do with regard to our foreign markets. Here, again, we are up against a problem in which new conditions have been brought
in as a result of the War. We have, as the result of the War and the setting up of Whitley Councils, practically wiped out the old form of competition so far as the wages of the working class are concerned. That is a revolution in itself. But I submit that we have to go a step further, having regard to the fact that we are not a self-supporting nation. We have to try to achieve that object, and, so far as that is concerned, I think it is necessary to extend still further the policy that has been initiated this afternoon by the Chancellor of the Exchequer in regard to Imperial Preference. I am a very keen believer in that, because I do not think there is anything that we require that cannot be found within the four corners of the British Empire. I believe that if we can create trading within the Empire and extend it afterwards to our Allies as laid down in the peace proposals, we are going to get well out of our financial difficulties and to solve the unemployment problem as well. I apologise to the Committee for dealing with these matters at length, and I only want to say further, that the Chancellor of the Exchequer has it in his own hands now to assist the nation to get rid of its financial difficulties by aiding the trade and commerce of this country on the lines I have suggested.

Mr. ARTHUR MICHAEL SAMUEL: I listened with very great interest to the speech of the Chancellor of the Exchequer, but I was rather surprised at the way in which he avoided treading on the thin ice of the question of a sinking fund. I was much more surprised that when he came to the question of the increased Death Duties he did not then attach to this large contribution which is to be laid upon the capital fund of the country, by means of increased Estate Duties, some small form of sinking fund. I reinforce my view that such a small sinking fund should be attached to what is undoubtedly a depletion of the capital fund, capital money, which will be spent as revenue, not only on moral grounds, as an example to the country that it should be economical, as the Chancellor of the Exchequer expressed the wish that it should be, but also on the grounds that it would, by its percussions and repercussions, certainly have advantageous effects otherwise. There were many discussions in this House in the time of Pitt as to whether it was wise to borrow money for the purpose of using it for sinking fund,
but in those days capital money was not being used for revenue, as the Chancellor of the Exchequer now proposes to use it. He proposes to take money for current expenditure from a capital fund in the form of Death Duty upon the capital fund of this country. I pass away from the details of the discussions about sinking funds which took place in the period of the Napoleonic Wars or after the wars of the French Revolution and suggest to this Committee the beneficial effect that a small sinking fund would have on War Loan values.
If there is one thing we require to do in this country, and for two reasons, it is to get down the price of money. In the first place, so that the War Loans or floating debt may be refunded or continued at a less rate of interest and that the taxpayer may be called upon to pay less money for interest from taxation for that purpose, and secondly, that if you can by borrowing money in Treasury Bills, say at 3½ per cent., re-invest that to yield 5 per cent or 5¼ per cent. in War Loan, you are not putting the country to any expense in by so doing, introducing a sinking fund for moral reasons, while at the same time elevating the market price of War Loan, thereby cheapening the value of money in this country by raising the capital value of the bell-wether among investments. I cannot impress too much on this Committee my view, that the need of this country is cheap money, not only for the purpose of manufacturers, with whom I identify myself, to assist them to extend trade and employment, but for the purpose of converting the great 5 per cent. War Loan, when it comes due in 1929, to a lower rate of interest. There is another reason why we need cheap money in this country, towards which, I think, we might be helped by operation of a sinking fund, which would by its repercussion increase the market value of War Loans and thereby reduce the loan able value or interest on money in this country, it is that the cheaper money is here, the better we shall be able to lend money abroad, and I do not think that America will be able to lend money to her own investors as cheaply as we shall be able to do. The cheaper we are able to lend money or finance foreign bills the better we shall be able to stimulate our export trade. By lending money cheaply, as we have done in the past, we have built up our great export position. For that purpose I do suggest, with great humility to the Chancellor
of the Exchequer, that now that he is taking a large slice of revenue from a capital fund by means of Estate Duty the time has come to ignore what was called heresy in the time of Pitt by borrowing money to repay capital debt, and that now the War is over, a sinking fund proposition should be again considered. There are many disadvantages and advantages in such a policy, too numerous to discuss now, but on balance the policy will prove beneficial to our nett financial position.

Mr. CHAMBERLAIN: In accordance with the usual practice that we should make progress with the Resolutions, I think we might get the necessary Resolutions now so that we might have a discussion at 8.15 on another subject. I have already undertaken to keep over until to-morrow the Resolutions dealing with the general amendment of the law which will enable a general discussion to be resumed to-morrow. I know my hon. Friend the Member for Wood Green (Mr. G. Locker-Lampson) desires to move an Amendment with respect to the Income Tax, and I will agree to keep over the Income Tax Resolution. I hope we may bring the discussion on the other Resolution to an early end this evening, and take up the subject afresh to-morrow.

Sir D. MACLEAN: I am sure that those who act with me are very desirous to do everything they can to facilitate business, and also so far as we can lighten the labours of the Chancellor of the Exchequer, who certainly has gone through a very arduous experience to-day. But one of the real difficulties facing us at the moment is the question of Preference which is involved in Resolutions Numbers 1, 2 and 9. There is the 3rd Resolution, or at any rate one of them, which on the face of it carries nothing to which one could object. It carries on existing duties, but it is an integral part of the system of Preference which it is proposed to set up. We have had no opportunity, except by the courtesy of the Chair for one moment, to put the House to a Division, but at the same time we must save our position, and I say at once that so far as we are concerned we are root and branch opposed to this proposal, and I hope to say so to-morrow. We are really most anxious not to inconvenience the Chancellor of the Exchequer or to put the House to an unnecessary Division, but if we allow these Resolutions to go by with
the ordinary challenge without forcing a Division, I want to make it perfectly clear that our position is in no way prejudiced, and I hope if we are fortunate enough to catch the eye of the Chairman to-morrow to give one or two reasons for our position. If that is clearly understood so far as we are concerned, we shall let the Resolutions go with the usual challenge.

Mr. CHAMBERLAIN: Of course, I do not want to commit my right hon. Friend and those associated with him to any proposition to which they do not agree. I think it would be very unusual on the first night to challenge on the Resolutions, the propositions which have been sketched in the Budget Statement. The right hon. Gentleman will have his opportunity, and more than one, of challenging the principle of Preference, in principle or any of its forms, and when that time comes I shall be very happy to meet him on that ground.

Mr. JOYNSON-HICKS: I should like to know when the Chancellor of the Exchequer proposes to bring on the Resolution regarding the Petrol Duty. I suggest that instead of merely consulting the Minister of Transport, seeing that he is proposing a new form of taxation on motor cars instead of by Petrol Duty, he should consider the desirability of appointing a small Committee, as he has done on one or two other questions of taxation. I do suggest that the trade interests know far more about the question of motor traffic than the Minister of Transport, who is a railway man pure and simple—I say that without any disrespect—and they would be able to help the Chancellor of the Exchequer to evolve a system of taxation which would raise the same amount of money on a fair basis.

Mr. CHAMBERLAIN: I do not want to commit myself to the appointment of a Committee at the moment, but I have said that before I make any proposition there must be an opportunity of consulting all the interests concerned, and I am anxious to have that consultation and co-operation.

Mr. JOYNSON-HICKS: When does my right hon. Friend propose to get rid of the Petrol Control Department?

Mr. CHAMBERLAIN: I hope that the duty will go on 17th May and the Department very soon afterwards.

Colonel GRETTON: Those who are interested, I presume, will have an opportunity
of discussing the Beer and Spirit Duties during the Debate to-morrow. No one in the Committee except the Government and the Chairman has seen these Resolutions, unless by courtesy of the officials at the Table a copy has been shown. I would suggest that a copy of these Resolutions should be placed in the Vote Office on these occasions after the Chancellor has made his statement, so that Members should not be asked to vote blindly on a number of complicated Resolutions, full of technical phraseology which it is impossible to understand when read out at the Table, and there is no further opportunity of studying them.

The CHAIRMAN: One point in the discussion which has taken place concerns the Chair, and I had better make myself quite clear about it. According to our custom, whatever Resolution or Resolutions are carried over to to-morrow's discussion, the one that comes first will be the one that will form the peg on which the whole of the Resolutions, the whole Budget Statement, can be discussed. Suppose Income Tax is the Resolution which is left over until to-morrow, on that hon. Members will not be confined to Income Tax, but can go over the whole field The result will be that, as the other Resolutions will be printed in the Votes to-morrow, their actual form will be in hon. Members' hands.

Mr. LOCKER-LAMPSON: On a point of Order. If an Amendment is moved to the Income Tax Resolution, that Amendment, I suppose, would have to be moved at the end of the general discussion?

The CHAIRMAN: That is the exact reason why I thought it only right to intervene. If I allowed an Amendment to a Resolution to come at the beginning I should be defeating the usual desire of the House to take a general discussion, but, of course, the Resolutions are open to relevant Amendments when, the general discussion has had a reasonable course.

Mr. CHAMBERLAIN: It would be open to my hon. Friend later in the evening to move an Amendment. It is quite clear, I think, that we must have the Income Tax Resolution to-morrow. We cannot carry the discussion over to-morrow.

Mr. LOCKER-LAMPSON: That is understood.

Colonel GRETTON: I must press the point, which I ventured to raise, that we
should be furnished with copies of these Resolutions before the House is asked to pass them. It is quite impossible to understand long technical phraseology when read out from the Chair.

Mr. CHAMBERLAIN: It has never been the custom to treat the first night of the Budget as a suitable occasion for discussing the proposals in detail. On the first night the discussion has always been of a most general character. If my hon. Friend's idea is that the first night of the Budget should be converted from a general discussion into a discussion of the detailed proposals of the different Resolutions, then I think, as at present advised, that it would not be for the general convenience or an improvement on our present practice; but I do not want to prejudge the suggestion of my hon. Friend.

Question put, and agreed to.

Orders of the Day — CONTINUATION OF DUTIES (CUSTOMS).

Resolved,
2. That the following duties of Customs imposed by Part I. of the Finance (No. 2) Act, 1915, and continued by Section 1 of the Finance Act, 1918, until the first day of August, nineteen hundred and nineteen, shall continue to be charged as from that date until the first day of August, nineteen hundred and twenty (that is to say):

Duty.
Section of Finance (No. 2) Act, 1915.


Additional duties on dried fruit
8


Additional duty on motor spirit
10 (1)


New import duties
12

And it is declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

Orders of the Day — CONTINUATION OF DUTIES (EXCISE).

Resolved,
3. That the additional duties of Excise upon medicine imposed by Section eleven of the Finance (No. 2) Act, 1915, and continued by Section two of the Finance Act, 1918, until the first day of August nineteen hundred and nineteen, shall continue to be charged until the first day of August, nineteen hundred and twenty.
And it is declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

Orders of the Day — SPIRITS (CUSTOMS).

Resolved,
4. That, in addition to the duties of Customs now payable on spirits imported into Great Britain or Ireland, there shall on and after the first day of May, nineteen hundred and nineteen, be charged the following duties (that is to say):

—
Up to and including the thirty-first day of August, nineteen hundred and nineteen, in respect of all spirits, and on and after the first day of September, nineteen hundred and nineteen, in respect of spirits shown to be the produce of a British Possession.
On and after the first day of September, nineteen hundred and nineteen, in respect of spirits not shown to be the produce of a British Possession.








£
s.
d.
£
s.
d.


For every gallon computed at proof of spirits of any description except perfumed spirits
…
…
…
…
…
1
0
0
1
2
6


For every gallon of perfumed spirits
…
1
11
10
1
15
10


For every gallon of liqueurs, cordials, mixtures, and other preparations entered in such a manner as to indicate that the strength is not to be tested
…
…
1
6
11
1
10
3

And it is declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

Orders of the Day — SPIRITS (EXCISE).

Resolved,
5. That in addition to the duty of Excise now payable for every gallon computed at proof of spirits distilled in the United Kingdom there shall, on and after the first day of May, nineteen hundred and nineteen, be charged the following duty (that is to say):—

£
s.
d.


For every gallon of spirits computed at proof
1
0
0

and so on in proportion for any less quantity.
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

Orders of the Day — BEER (CUSTOMS).

Resolved,
6. That in addition to the duties of Customs now payable on beer imported into Great Britain or Ireland there shall, on and after the first day of May, nineteen hundred and nineteen, be charged the following duties (that is to say):

In the case of beer called or similar to mum, spruce, or black beer, or Berlin white beer or other preparations, whether fermented or not fermented, of a similar character—






£
s.
d.


For every thirty-six gallons where the worts thereof are or were before fermentation of a specific gravity—





Not exceeding one thousand two hundred and fifteen degrees, a duty of
4
0
0


Exceeding one thousand two hundred and fifteen degrees, a duty of
4
13
9


In the case of every description of beer other than that above specified—





For every thirty-six gallons where the worts thereof were before fermentation of a specific gravity of one thousand and fifty-five degrees, a duty of
1
0
0

and so in proportion for any difference in gravity.
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

Orders of the Day — BEER (EXCISE).

Resolved,
7. That in addition to the duty of Excise now payable in respect of beer brewed in the United Kingdom there shall, on and after the first day of May, nineteen hundred and nineteen be charged the following duty (that is to say):—

£
s.
d.


For every thirty-six gallons of worts of a specific gravity of one thousand and fifty-five degrees, a duty of
1
0
0

and so on in proportion for any difference in quantity or gravity.
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

Orders of the Day — PRIVATE BREWERS' LICENCES.

Resolved,
8. That in lieu of the existing duties charged upon licences to be taken out annually by brewers of beer (other than brewers for sale) occupying houses of an annual value not exceeding fifteen pounds there shall, on and after the first day of October, nineteen hundred and nineteen, be charged the following duties (that is to say):—

£
s.
d.


If the brewer is the occupier of a house of an annual value exceeding ten pounds and not exceeding fifteen pounds—





(a) where he brews solely for his domestic use
2
10
0


(b) in any other case
0
4
0


If the annual value of such house does not exceed ten pounds
1
5
0

And such licences shall be taken out by all such brewers, including those who brew solely for their own domestic use.

Orders of the Day — REDUCTION OF CERTAIN DRAWBACKS AND ALLOWANCES.

Resolved,
9. The drawback payable on the exportation or shipment as stores of any chicory, coffee, or tobacco, or in respect of any molasses delivered by a refiner to a licensed distiller for use in the manufacture of spirits, and the allowance payable to a refiner in respect of any molasses used solely for the purpose of food for stock, shall be reduced by an amount not exceeding one-sixth of such drawback, or allowance if the duty charged on such chicory, coffee, or tobacco, or on the sugar from which such molasses was produced, was a duty of Customs or Excise less than the existing duty.

Orders of the Day — EXCESS PROFITS DUTY.

Resolved,
11. That—
(a) Excess Profits Duty under Part III. of the Finance (No. 2) Act, 1915, as amended or extended by any subsequent enactment, shall, unless Parliament otherwise determine, be charged for any accounting period ending on or after the first day of August, nineteen hundred and nineteen, and before the fifth day of August, nineteen hundred and twenty; and
(b) Excess Profits Duty shall be an amount equal to forty per centum instead of eighty per centum of the excess profits for any accounting period commencing on or after the first day of January, nineteen hundred and nineteen, or in the case of an accounting period which has commenced before that date, but ends after that date, forty per centum instead of eighty per centum of so much of the excess profits as may be apportioned to the part commencing on that date.

Orders of the Day — DEATH DUTIES: INCREASE OF RATE OF INTEREST ON DUTY OUTSTANDING.

Resolved,
12. That the rate of interest payable on Death Duties shall be five per cent. instead of three per cent.

Orders of the Day — ESTATE DUTY: ALTERATION OF SCALE.

Resolved,
13. That there shall be substituted for the rates of Estate Duty set out in the First Schedule to the Finance Act, 1914, the following rates:

Orders of the Day — BOARD OF EDUCATION SCHEME CONFIRMATION BILL.

Order read for Second Reading of the Board of Education Scheme (Crossley and Porter Orphan Home and School) Confirmation Bill.

The PARLIAMENTARY SECRETARY to the BOARD of EDUCATION (Mr. Herbert Lewis): I beg to move, "That the Bill be now read a second time."

Where the principal Value of the Estate
Estate Duty shall be payable at the rate per cent. of


Exceeds



£
£



100 and does not exceed
500
1


500 and does not exceed
1,000
2


1,000 and does not exceed
5,000
3


5,000 and does not exceed
10,000
4


10,000 and does not exceed
15,000
5


15,000 and does not exceed
20,000
6


20,000 and does not exceed
25,000
7


25,000 and does not exceed
30,000
8


30,000 and does not exceed
40,000
9


40,000 and does not exceed
50,000
10


50,000 and does not exceed
60,000
11


60,000 and does not exceed
70,000
12


70,000 and does not exceed
90,000
13


90,000 and does not exceed
110,000
14


110,000 and does not exceed
130,000
15


130,000 and does not exceed
150,000
16


150,000 and does not exceed
175,000
17


175,000 and does not exceed
200,000
18


200,000 and does not exceed
225,000
19


225,000 and does not exceed
250,000
20


250,000 and does not exceed
300,000
21


300,000 and does not exceed
350,000
22


350,000 and does not exceed
400,000
23


400,000 and does not exceed
450,000
24


450,000 and does not exceed
500,000
25


500,000 and does not exceed
600,000
26


600,000 and does not exceed
800,000
27


800,000 and does not exceed
1,000,000
28


1,000,000 and does not exceed
1,250,000
30


1,250,000 and does not exceed
1,500,000
32


1,500,000 and does not exceed
2,000,000
35


2,000,000 and does not exceed

40

Orders of the Day — AMENDMENT OF LAW.

Resolved,
14. That it is expedient to amend the Law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance.

Mr. CHAMBERLAIN: I understand the general discussion will be resumed on the Income Tax.
Resolutions to be reported To-morrow (Thursday); Committee to sit again To-morrow.

The PARLIAMENTARY SECRETARY to the BOARD of EDUCATION (Mr. Herbert Lewis): It is a Bill to confirm a scheme certified by the Board of Education under the Charitable Trusts Act, 1853. The scheme forms the subject of a Report which has been on the Table of the House for some weeks. It has been published as required by law, and every opportunity has been offered to lodge objections to the scheme. There has been only one suggestion for its alteration, and that on a point of detail, and that suggestion has been
withdrawn. The Bill therefore comes before the House as an unopposed measure with the agreement of ail concerned. It is a charity that was founded by the Crossley family in 1868, and it is administered by governors who have been incorporated by Royal Charter. Owing to the increased cost of education, and to the rise in the cost of living, it has been found impossible to make the school pay its way, and the object of this Bill is to put the school in a position that will enable it to earn the Board of Education Grants and to become a thoroughly first rate secondary school. I have heard of no opposition from any quarter whatever, and I trust the House will give the Bill a Second Reading.

Question put, and agreed to.

Bill accordingly read a second time.

Resolved, "That this House will immediately resolve itself into the Committee on the Bill."—[Mr. Lewis.]

Bill accordingly considered in Committee, and reported, without Amendment; read the third time, and passed.

The remaining Government Orders were read, and postponed.

Mr. DEPUTY-SPEAKER (Mr. Whitley): There being no other Government business on the Paper, I will leave the Chair until 8.15.

Sitting suspended until a Quarter-past Eight o'clock.

AGRICULTURE.

GOVERNMENT POLICY.

Captain R.TERRELL: I beg to move,
That, in view of the present serious position, it is desirable that a Royal Commission be forthwith appointed to inquire into the economic position of the industry, and to ascertain what measures are necessary to encourage agriculture and to enable it permanently to pay a reasonable wage to the people employed, and that in the constitution of such commission representation be given to all interests concerned.
Having been successful in the ballot, I rise to make my maiden speech and I ask the indulgence of the House. I move this Resolution since I represent a purely agricultural constituency and I make no apology for doing so, because I think that it is within the remembrance of this House that so far, in spite of various attempts, we have been unable to extract from the Government
any agricultural policy. I remember quite well on the second day that this House assembled putting a question on this very subject to the Prime Minister. The Leader of the House replied to my inquiry and said that it was premature and apparently it is premature now, because ever since that date, in spite of repeated attempts, we have made no headway at all in finding a solution to this all-important problem.
Since that date a large number of hon. Members have asked similar questions. Various agricultural debates have taken place but all to no purpose, and the utmost that we have accomplished is to get from the Government a promise that they will overhaul the Department of the Board of Agriculture and Fisheries. They have promised to thoroughly overhaul the machinery of that Department and bring it up to date, and put it on a sound business footing. I assume that that is being done, but I should like to hear from the hon. and gallant Member for Dudley (Sir A. Boscawen) exactly what progress is being made in that direction. I cannot forget a very important resolution on this very question which was sent to me a few weeks ago from the Berks and Oxford shire Chamber of Commerce, and I will read it to the House:
That this meeting of the Berks and Oxford Chamber feels that the present Board of Agriculture is, as regards many important matters connected with agriculture, both powerless and inefficient, and calls upon the Government to immediately reorganise the same, giving it sufficient power to carry out its proper functions.
However, since we have a definite assurance from the Government that they are overhauling the machinery of this Department, I do not intend to dwell any further on that point, but I will now turn to the complete absence of any agricultural policy. Last March the hon. and gallant Member for Dudley, when replying to agricultural criticisms in this House, and apparently voicing the sentiments of his Department, made the following statement:
The difficulties of agriculture will be solved not by administrative machinery, although that may help a good deal, but by three things. Firstly, by wise estate management and judicious expenditure on the part of the owners; secondly, by skill and perseverence on the part of the cultivators; and thirdly, by industry on the part of the labourers, whom we all hope to see a contented and well paid class of labour. These are main considerations.
There is not much about policy in a statement of this nature, and I think that the agriculturists of this country will be inclined
to say, "Thank you for nothing." If I may use an expression of popular language to-day, the agriculturists of this country are "fed up," fed to the teeth, with the constant appeals to their patriotism, with the daily appeals to their intelligence, and appeals to their energy and industry. All this put together will not help to make the farms pay. Pious exhortations of this kind are no use to the farmers to-day, and what he really wants is a policy. These sort of appeals will not help to meet falling prices which are brought about by the wholesale importation of foreign cereals, nor will they place the farmers in a good enough position to enable them to pay the wages which are rising with such striking rapidity.
Before passing from this, I would like to say that the demands of the agricultural labourers have my entire sympathy, but how can this industry be called upon to pay those extra charges unless it is first of all in a flourishing condition. Any hon. Member of this house knows full well that you cannot run any business without a policy. It does not matter whether it is a great engineering or shipbuilding business, or a departmental stores, or even a one-man business. The first thing, if you want success is to formulate a policy, and unless that is done for this great industry of agriculture, which gives employment in this country to more people than any other industry, I really cannot see how the farmers can pay these big wages which they are asked to pay to-day. Let me turn to the last important speech made by the President of the Board of Agriculture and Fisheries. Some two or three weeks ago he addressed a large meeting of farmers at Taunton. His speech was full of warm and generous exhortations. It abounded with appeals. It was stuffed full and chock-block with sound advice, just as you would expect from a man of his ability and great experience; but the farmers were there hoping to hear a statement in regard to the Government's intentions, and they went away somewhat disappointed. I would like to read a short paragraph from his speech—
Well, now, I think the Government—I cannot tell you, I am sorry to say, with certainty—are prepared to prolong the period of the Corn Production Act, and to fix a minimum price so as to suit the new rates of wages which farmers are compelled to pay.
That, of course, was met with loud cheers. He then went on:
I believe that will be their policy. I am sure your chairman will understand what I mean
when I say that it will be postponed until we come to the Agricultural Vote in the House of Commons. I think, and he will correct me if I am wrong, that the Parliamentary Secretary has promised that the policy shall be definitely announced when the Agricultural Vote comes before the House.
Personally, I think that is a very wobbly speech. Let me just pick out one or two of his remarks. He starts off: "Well, now, I think." He then goes on, "I cannot tell you, I am sorry to say." Then, again, he says, "I think the Government are prepared." Bear in mind this is the President of the Board of Agriculture speaking. Later, he says, "I am sure the Chairman will understand what I mean." Again further he says, "I think, and he will correct me if I am wrong" There is nothing very positive about a statement of that nature. Then the Minister went on to deal with the prices of cereals for 1919. Anybody who knows anything at all about agriculture knows full well that you cannot run this industry by simply doling out your policy in penny packets. It is quite impossible. You must have a concrete policy, and what agriculture really needs is a statement embracing at least ten years. That will enable the farmer to look ahead. It will give the farmer a chance of arranging the rotation of his crops. It will enable him to see if it is possible to pay these increased wages. It will give him time to see if he can keep the present corn lands as they are, or whether he will have to turn them back to grass. Finally, it will give him an opportunity of finding out whether or not it is worth his while to remain in the industry. The existing uncertainty is disastrous. You find it manifested in what is taking place in all parts of the country, and in what is termed "the strike of farmers." Those are not my words; I take them from one of the daily papers. You find it in every county. Meeting after meeting is being held, and protest after protest is being made. I should be very glad indeed if the Board of Agriculture would tell us how many resolutions they have received. I have received dozens, and I should think that they must have received thousands.
I do not pretend to be an export in agricultural matters as a large number of hon. Members in this House. I am only a plain business man, but I maintain that it would be folly for me, or for that matter for any other hon. Member, to come to this House and denounce a state of affairs in any Department unless he is able to suggest a remedy. I have only waited for this opportunity,
because I have not been quite as fortunate as I should have liked in catching either Mr. Speaker's eye or that of his Deputy. I have, I believe I am quite right in saying, got up from twenty to twenty-five times, and I have given quite a lot of time to preparing what I thought to be very striking speeches. I therefore welcome this opportunity of being able at last to give the House my view how a policy should be found for this industry. It will be seen from my resolution that I recommend that a Royal Commission be set up forthwith to thoroughly investigate the whole of this industry. I do not mean a Royal Commission of the old type. I do not want your pre-war Royal Commission at all. I want a Royal Commission set up on business lines. We all know about the old Royal Commissions which used to take some three years to hear the evidence. I believe they took three years to write their reports and eventually their findings were pigeon-holed for the benefit of posterity. That is not what we want at all. This Commission must be set up at once. It must be presided over by a judge of the High Court. I lay great stress on that point. You must have a judge who is used to sifting evidence and who can expedite the proceedings of a commission of this nature. All parties interested must be represented. You must, I suppose, have the Government officials, you must have the landlords, you must have the tenant farmers, you must have the agricultural labourers, and the consumers also must be represented on that Royal Commission. It must have a definite order to report by a given date, just the same as the Royal Commission on the Coal Mines was instructed to report by a certain date. If that course were adopted—and personally I see no objection to it—the Royal Commission could report within two or three months' time, and then the farmers would be in a position in the autumn to know what to do in regard to their crops for the following year. As it is, the Government seems, perhaps quite rightly, to be labouring under the difficulty of not being able to adjust the various points of view, and, in order to bear out this statement, the House will, I hope, forgive me if I quote another short paragraph from the Noble Peer's speech. He said:
My great difficulty is that I never do get to know what the farmers have been thinking until something is done, and then I find it is not quite what they wanted.
Does not a confession of that kind, does not so candid an admission, point to the necessity of something being done to put the Noble Lord in a position to find out what the farmers are thinking about, and what their views are, before we enter on any new legislation? Does it not suggest that a great deal of the unrest in the country, which unfortunately is growing rather than diminishing, is called for? Do not hon. Members think it is about time that we tried to find a middle course—a course which would satisfy the natural aspirations of the masses in industrial centres for cheap food, which would also satisfy all the people employed on the land, and which would make certain that the people on the land had a chance of earning a decent livelihood It is high time we made a very strong effort to find such a course. It may be said that the agricultural interests do not want a Royal Commission. I do not expect they all do, but the minority which does not want a Commission is one composed of those who have the least need to be afraid of the future outlook. They are the larger and the wealthier farmers.
In the last two or three weeks meetings have been held in almost every county in this country, from one end of the land to the other, and all have voted in favour of the course which I now suggest. I am certain that the agricultural labourers in this country would welcome a Commission of this kind. They are keenly anxious for an opportunity of putting their side of the case before a responsible body. The agricultural interests of this country deserve consideration. They are often the victims of cheap sneers, but they played a very great part for the nation during the War. Their efforts, and when I say their efforts I mean the efforts of farmers and all the people employed on the land, played a great part in saving the people of this land from starvation, and I am sure that the work they did also played a very important part in bringing about ultimate victory. Are we going to revert to the position before the War? What did we find after the War had been on for some twelve or eighteen months? We found, much to our surprise, that we were almost wholly dependent on foreigners for bur food supplies. Are we going to revert to that position? I sincerely hope not. We should aim to place this country in such a position as regards its food supplies that if at any future date we should find ourselves in a similar position, at least we
should have enough food in the country for our people. What we ought to aim at is British food for the British people. I therefore move my Resolution. It is always open to the Government at the last moment, as a sort of death-bed repentance, to come forward and say, "There is no need for a Royal Commission, as we have a policy." While I would welcome such an announcement, I must say I would sooner see the whole question threshed out by all parties interested, because I feel that if the course which I have suggested is adopted the Government will get very valuable information indeed. I hope therefore they will be able to satisfy my demand, which points to the only course left open, and I venture to say that if this all-important problem is not tackled at once and in a masterly manner, it may turn out to be one of the gravest problems of our time.

Lieutenant-Colonel WEIGALL: In seconding the Resolution which has been so eloquently proposed by my hon. and gallant Friend I am going to assume from answers I have received in this House, and also from inspired reports that have appeared in the Press in the last two or three days, that the Government propose to accede to the demand contained in the Motion. Therefore I will not detain the House by adducing any arguments beyond saying that no one who has followed the course of agricultural events during the last year or two can fail to realise that it would be absolutely impossible for any Government at the moment to adumbrate any policy which could satisfy the nation as a whole or the agricultural community in particular without a thorough investigation. It is difficult enough, as we heard this afternoon, in the financial field to devise any standard, but with the agricultural industry it is wholly impossible, from the point of view of labour and from the whole economic point of view, to either stabilise or standardise it at the moment. Therefore, I cannot join with my hon. and gallant Friend in holding up to scorn the Noble Lord who presides over the Board for not being able at this moment to produce a cut-and-dried policy. At the same time, the appointment of a Royal Commission is the only course that is now left open to the Government, and I believe, from my knowledge of the agricultural industry, that that would give nothing but satisfaction. During the last few days there has arisen an agitation in two or three counties in England owing to the decision
of the Government to differentiate in the price allowed for milk in those counties from the price allowed in other counties. I do not know whether the field covered by the Commission is going to more than cover stock production and corn production. If it is also going to include milk production, I would ask my hon. Friend to defer examination of the whole question of milk production until such time as the Report of the Government Committee, over which it is my privilege to be deputy-chairman, is issued. I think I can promise my hon. Friend that our Report will be in the hands of the House within the next two or three weeks. It covers the whole field of milk production and distribution. The case is being examined, not only in this country, but with the Dominions. It might result in some overlapping if the Royal Commission started over the same field as that covered by the body whose conclusions will be in the hands of the House at an early date.
In regard to this Commission everything will depend on the constitution of the personnel. I hope that the Government is going to profit by the experience of the Coal Commission and that this Commission, when set up, will be so composed that it will make a really earnest effort to arrive, both from the national point of view and from the agricultural point of view, at the true economic conditions now prevailing in the industry, and that it is not going to be made a playground for every peculiar person to air his fads and fancies in a wholly unpractical way. The nation is now at the cross roads so far as agriculture is concerned. The real advantage of this Commission will be as an educational effort, because what we really suffer from is the absolute ignorance of the average man in the industrial area as to the very elements of the agricultural problem. If it can clearly show, in perfectly simple language, to the ordinary man in the street and in the industrial area, who merely looks upon it through the eyeglass of the consumer all the difficulties and intricacies of the most complicated and complex industry in this country, it will have more than justified its existence. It can only do that if it is composed of men of sufficiently open mind and, from the point of view of eliciting information, possessed of sufficient knowledge of the industry to examine and cross-examine witnesses in the sort of way that will contribute something to the information of the nation as a
whole. It is for the nation now to make up its mind whether it is or is not worth while carrying on this industry on an economic basis. It can only arrive at that decision if it has the case presented in such a way that the average man of ordinary intelligence who knows nothing about agriculture can say, "Yea" or "Nay," and can say, "On this evidence I am perfectly prepared to take the risk. We have had a great War, and so far as I am concerned I am prepared to take the risk that during my lifetime at any rate I shall not run the danger I have incurred during the last five years." If he takes that risk, all I would remark on that attitude is that any man who takes it is incurring a responsibility that I, for one, would certainly refuse to share—namely, the responsibility to his children and his children's children. He is also incurring a very grave responsibility in sharing in the benefits which during his lifetime have been won for him during the War, which he could not possibly have enjoyed had it not been for the efforts of the agricultural industry in this country. I would conclude by quoting some words which were used eighty-two years ago. They are so wholly true of the agricultural position to-day that, with the leave of the House, I will repeat them:
It is of the highest importance to the welfare of all classes of this country that care should be taken that the main sources of your supply of food should be derived from domestic agriculture. The additional price you may pay in effecting that object cannot be vindicated as a bonus or a premium to agriculture, but only on the ground of its being advantageous to the nation as a whole. It is to the interests of all classes of this nation that we should be paying occasionally a small additional sum upon our own domestic produce in order that we may thereby establish a security and an insurance against the calamities that would ensue if we became altogether or in a great part at any time dependent upon foreign countries for our supply.
Those words were used by Sir Robert Peel in this House eighty-two years ago. They appear to me to be so true to-day that, in seconding this Resolution, I commend them to the House.

9.0 P.M.

Mr. T. A. LEWIS: In rising to address the House, for the first time, I hope I may have its indulgence, though I cannot promise anything in return very much except that I shall be as brief as is possible for a very nervous Member. I wish to join in the appeal which has been made for the setting up of a Royal Commission to inquire into this very important
question. I am afraid in the old days an appeal of this nature would be construed to mean indifference, or it might be hostility. A Royal Commission in the past has more or less a stock Government sedative and a very convenient form of stifling all agitation by excess of official attention. I am not at all sure that many subjects have not been relegated to a Royal Commission for the same reason that an inconvenient Member has sometimes been elevated to another place, because both places have a reputation for comparative repose, where the wicked are supposed to cease from troubling, and where to a certain extent the weary are at rest. I think Royal Commissions are by way of embarking on very much more useful careers, and in this respect the recent and indeed present Royal Commission on coal has set a very important and I think very beneficial precedent. It has shown that it could sweep away all the dilatory traditions that attached to Royal Commissions in the past and that it could work very expeditiously, and that it could deal very exhaustively with a vast subject and could present a Report very quickly. That means in these days, too, that so much publicity is given to the proceedings that the public feel that they are more or less partners in the inquiry; while the fact that the Government has shown itself ready to put the recommendations into immediate operation quickens public interest and gives a deeper sense of responsibility to the Commissioners who are conducting the inquiry. It has been said that government by public meeting is a highly precarious form of government by Commission, but I think that we have arrived at a time when it is very desirable that we should have government partly by Royal Commissions. They are the only, or at least they are the best, methods by which we can gather together information which is absolutely essential. There are the munitions by which the Government is able to formulate its policy. In the old days I am afraid those munitions were turned out almost exclusively from party factories. I would particularly point out that it is a misfortune that the great question of agriculture has for so long been a subject of acute controversy, and I do think that a comprehensive inquiry, and an unbiassed inquiry, and an expert inquiry, would help to lift
this great question from the arena of factious disputation and immensely strengthen the hands of the Government when they came to deal with it in a legislative manner. There are plenty of people outside this House, and very largely because they are outside this House, who would like to take advantage of every opportunity of weaking the authority and impairing the competence of this House in the eyes of the country. I cannot imagine anything which would contribute more powerfully to the maintenance and enhancement of the authority of this House than the conviction growing outside that the Government of the day and Parliament itself does not proceed to legislate on great questions until it has exhausted all the means at its disposal for gathering the facts and figures in connection with the subject. There are in this House, I believe, more parties than there have ever been before. They vary in size, and also, perhaps, in quality, and certainly in numbers, and I do not think it would be extravagant to say that they are not all equally important. But I think I may say there has never been a Parliament where there has been such a general amount of agreement on the main immediate legislative objectives, and I think it is in the best interests of the country and Parliament that we should do all that we possibly can to maintain and develop this unity of purpose and turn out useful legislation for the benefit of the nation. I come from an industrial district which is also concerned with agriculture, and there is this atmosphere of unrest surrounding us wherever we go. There are thousands of explanations of it, almost as many as there, are grievances, and that means a great many. But I think you can reduce the large majority of them to a feeling of distrust which is growing and spreading and hardening into bitter conviction that the working men and the workers generally of this country are being exploited in their lives and labour, in other words, that the share which falls to them of the fruits of their toil is a disproportionate one. That is the cause, I think, of this miasma of mistrust which is spreading everywhere, and I am absolutely convinced that nothing will dispel it permanently except the letting in upon it of the strong sunlight of the full knowledge of the facts which appertain to the situation.
I would like to mention in this connection the recent coal crisis. I come from the heart of one of the largest mining areas of South Wales. What happened there? Before the Commission was set up, the men made a demand, and by an overwhelming majority they said they were prepared to go on strike to enforce that demand. The Coal Commission inquiry was held, and by an even more overwhelming majority they decided to accept the recommendations of the Royal Commission. What did that prove? It proved that what the men, the workmen of this country, wanted was not so much that their terms in their entirety should be granted, but to have the feeling, amounting, if possible, to a certainty, that they were getting what was just to them. That, I think, is the great lesson which the recent mining crisis and the Coal Commission brought.
I would appeal to the Government to set up a series of these Commissions. Let the searchlight of Royal Commissions play upon every nook and corner of our industrial system. Let everything be brought to light, and then, in the work of reconstruction, we shall not have any hidden places in our structure. I would point out that I am not making a new appeal. During the last four or five years Members appealed very frequently, and the appeal was made from the country generally, to the Government and to all those in authority, to tell them all the facts. In the darkest days of the War, and some of them were very dark, the spirit of the nation seemed to rise as its fortunes fell, and in the very darkest hours, when the gloomiest forebodings darkened the whole horizon, all they asked was, "Tell us the facts, tell us where we are, because we are afraid of nothing, provided we are facing realities and we know." I think that a country which came through that time of trial is prepared to face the problems of reconstruction with the same character and high spirit. That, I am convinced, is the path of wisdom. It is the way of safety, and it is the only road that leads to permanent peace in all our industrial conditions in town and country. In particular, I would appeal for greater consideration to this great industry of agriculture. We say in our reminiscent moments that it is our greatest and oldest industry, but its greatness has not saved it from frequent adversity, and its ancient days has not saved it from very grevious neglect in the
past. There were signs of a revived interest in the industry before the War, and the present Prime Minister, if I remember rightly, started a campaign and inaugurated a programme to deal with the whole industry, when the War intervened. But everything that has happened since has strengthened the case for a reconsideration of the whole question. The hon. Member who moved this Motion spoke truly when he said that a large share in the defeat of the German submarine belongs to the agricultural community of these islands, from the landowner down to the farm labourers, men, women and children. No industry played its part with greater elasticity, with greater industry and with greater sacrifice. We have all in this House pledged our word and adjured our consciences that none of the men who risked all, and nearly lost everything, in the great adventure, shall for the rest of their days feel the pang of penury or distress.
I do not think it is more than common prudence to say that we ought to see to it that those industries which stood us in such good stead in the dark days when the nation was in great extremity should not be allowed to fall into decay. It appears to me that the legislative instalments of the reconstruction programme of the Government already passed through this House assume that we ought to have a progressive agricultural policy. There is, for instance, the Ways and Communications Bill. That is to set up a system of railways, motor service, and other means of getting about the country in order to link up the inaccessible places with the hives of industry. That more or less assumes that we are to have a revival of prosperity in agriculture. Then, again, the very best Health Bill in the world will be of little avail to ourselves unless we can be quite sure that the dwellers in cities and large towns shall be every now and again recruited from the ranks of the countryside. Take, further, the Land Settlement Bill and its complement, the Land Acquisition Bill. These are designed to provide opportunities for men to settle on the land in increased numbers. I think it would be the most heartless mockery to ask these men to go and settle on the land, to work hard and train themselves for the work, to sink their little capital in it, and then to turn round and say, "We do not believe the agricultural conditions of the future
are such as to be able to afford you a comfortable livelihood:" I hope very much, therefore, that the terms of reference, if the Government have decided to set up a Royal Commission, will be as broad and as wide as possible. Let us include everything. I would go so far as to ask them particularly to put in the very vexed and difficult question of nationalisation. After all, nationalisation is in the air in these days, and one of these next years it may very well come down to the land. When that time comes, it will prevent a great deal of aimless talk and unsubstantial thinking, if we have to guide us expert advice on these lines. Therefore, I would ask the Government if they decide to do this, to let the terms of reference be very wide indeed. In any case, there is no harm done, if they are not able to accept the recommendations made. The country will have gained a good deal. It will prove to the country, particularly to the agricultural community, that the Government are prepared, so far as in them lies, to deal justly with this great industry. It will also prove that they are prepared to continue the war-time practice, which is a very valuable one, of marshalling and organising all the resources of knowledge and the accumulated fruits of research, and harnessing them to the immediate needs of the community at large.

Mr. THOMAS DAVIES: I represent a large division, which is equal to about one-half the county of Gloucester, and the former representatives of which bore a very honoured name in this House, namely, Hicks-Beach, both father and son. That division, as I have said, is equal to about half the county of Gloucester, and we have in that division almost every system of farming. In the hills there are the sheep and the barley farmers and in the valleys the milk producers. There is also the market gardening industry, and a good deal of mixed farming in various places as well. From all you have the one same complaint, that at the present moment there is a kind of paralysis for every one of these classes because they say they do not know whether it will be worth their while going on with the industry or not until the Government have formulated their policy. I want to point out, too, that the very question of housing in the country districts depends very largely indeed upon the line you take over agriculture, because, unless you are going to make agriculture
prosper, there are enough houses in the country already, but if you are going to have a prosperous industry we shall want at once a good many houses, and we shall want them of a far better type, and even to-day, with the wages that are being paid, it is almost impossible for the agricultural labourer to make two ends meet.
I would like to point out a case which came before me the year before war broke out, to show the position in which the agricultural labourer then was, and I think you will see he is very little better off now. I happen to be the secretary, at Cirencester, in the middle of the Cotswold Hills, of a very large benefit society with some 15,000 members. A woman came to me about a little matter of a club account in October, 1913. She wanted a little help from the society, and this is the position in which she placed her financial budget. She said, "My husband is a good, steady man." I said, "I know he is. I have known him for a quarter of a century, and he has worked for the same farmer all that time." "Yes," she said, "and in the winter time he gets 1s. a week more than the ordinary labourer because he is a good man." His wages then were 14s. a week; that is,. 1s. a week above the standard rate of wages in that part of the country in the winter season. I said, "How do you manage to get a living out of that?" She replied, "My husband gets his 14s. a week. He is a very steady, careful, sober man, and he only keeps back 2s. a week for beer and tobacco." One-seventh of one's income for beer and tobacco is rather large, but 3½d. a day is not very much for tobacco and beer for a working man. I said, "That brings it back to 12s." She said, "We have a very good cottage indeed. I do not grumble a bit. It has three decent bedrooms, and the water laid on, and we only pay 1s. 6d. a week for it." I said, "That brings it back to 10s. 6d." Then she said, "There is 9d. to you and 3d. for the national insurance." "That," I said, "brings it back to 9s. 6d." She stated that there was 1s. for coal, which brought it back to 8s. 6d. She said, "There is my husband, myself, my eldest girl aged twelve, my youngest boy aged ten, and we have to live on 8s. 6d." I say that you can Hardly credit that people can live on that. But that man has actually saved £58 in the society of which I am secretary, showing that he must have scraped and almost starved himself rather than be a burden on the parish in time of need. We
want to encourage that feeling from top to bottom, that the man shall be independent and not look to the parish, but look to his own exertions, and to-day, although that man is getting more than double what he got in 1913, yet, in consequence of the high price of commodities—of his coal, his clothes, his boots, his bread and meat—he actually is slightly worse off to-day, as we think, than he was at that time. That being so, can you wonder when the sons of these men are grown up—this man, by the way, has only one son—that very few ever go upon the land? They go upon the railway, into the shops in the towns, into the Post Office, into almost anything, and for two reasons: In the first place, they get wages which are much more commensurate to their ability, and the second point with many is this: If they go on the railway, or in the police force, or into the Post Office they get a good pension when they are incapacitated from work—and that counts for a lot—whereas if they stay upon the land no farmer is going to give them a pension, and they simply have to take the old age pension. From the labour point of view, therefore, to keep these men on the land, to keep them from crowding into the towns is to the advantage of labour. It is, I suggest, for the Labour party to see that they have proper housing accommodation and good wages; but these can only be obtained if the industry itself is prosperous and can afford to give good wages.
That being so, I wish with all the power and energy that I possess to support the Resolution to have a Commission appointed that shall report within two or three months, because I assure hon. Members that at the present moment the number of farmers that have given notice to leave their farms, or are seriously considering it, for next Michael as is very large. I have lived on the Cotswold Hills for thirty-three years, and I have never known so many farms taken in hand in the way of sales, and so many estates being broken up into small quantities. Certainly I never knew so many farmers give notice as happened last Lady Day and is in contemplation for next Michael as. This must be stopped if the country is to prosper. But so long as the present state of uncertainly exists, first, as to prices and second, as to whether they are going on in their farms or not, just so long you will not have increased employment in the country districts. We want increased employment on the land. That will mean better cottages, and it will give a great
deal of employment to those people who are now drawing unemployment pay. By so doing I think the Government will do a good thing not only for agriculture, but for the country at large.

The PARLIAMENTARY SECRETARY to the BOARD of AGRICULTURE (Sir Arthur Boscawen): If this Debate has done nothing else, or if it were going to do nothing else, it has at all events produced three very excellent maiden speeches. I desire to congratulate the makers of those speeches upon their efforts this evening. I am very glad that the fortune of the ballot enabled my hon. and gallant Friend the Member for Henley (Captain R. Terrell) to get round the difficulty he had experienced of catching your eye, Mr. Deputy-Speaker. As regards my hon. Friend the Member for Pontypridd, it almost made my mouth water when he talked of the place where the weary are at rest. I was for over two years Parliamentary Secretary to the Pensions Ministry—that was not a place for the weary to rest. When I was transferred to my present position a friend of mine said: "You will have an easy time now." I cannot say that I have found, up to date, that the Board of Agriculture, interesting as it is to the last degree, is precisely the place where, under present conditions, the weary are at rest. Well, my hon. Friend behind me who spoke last did, I think, put his finger on what is the crux of the situation. We all want to see a decent living wage—and, indeed, better than what is ordinarily called a living wage—paid to the agricultural labourer. But we want to be assured that the industry can pay such a wage. What my hon. Friend said touches really the important matter in the question. I have risen at this early stage in the Debate, not that I want in any way to stop the Debate—it may, perhaps, produce other maiden speeches as good as those we have already heard; and I hope it will, because the more the Members who interest themselves in this agricultural problem and who realise the immense importance of agriculture to the country at the present moment, the better—I have risen simply because I think it may be for the convenience of the House if I make a perfectly plain statement as to what are the intentions of the Government, so that the House may know precisely how it may view the present Resolution.
On behalf of the Government I am not going to oppose this Motion. On the contrary,
before it was put on the Paper we at the Board of Agriculture had been considering the necessity of appointing just such a Commission as my hon. Friend suggests. The Government now have decided to appoint such a Commission forthwith. I am not in a position to-night either to mention the names of the Commissioners nor to give the precise terms of reference, but I may say as regards the names that the point which occurs in my hon. and gallant Friend's Motion will be taken into account and carried out—namely, that all classes interested will be represented. There will be representatives of such bodies as the Farmers' Union, the Agricultural Labourers' Union, the Workers' Union, and others. These will represent the farmers and the Labour aspect of the case; and then, perhaps, the Government will be represented. I must not be understood to give any exhaustive account of the interests to be represented. All material interests will be represented. Not only so, but it is our intention not to have a lengthy body which shall shelve the question for months or years. On the contrary, we want to get a quick Report on the main question so that we can base our policy on it in the next few months.
When I say a quick Report on the main question I mean as regards the economic position of the more important branches of the agricultural industry, such as the production of corn, meat, and milk. We shall desire to get a Report in the next month or two in order to base our policy. It is quite true that the Commission may have referred to it other matters—bigger and wider questions—but if that is done we shall ask for an interim Report very much as has been done in the case of the Coal Commission. We shall ask in respect to the major aspects of the economic position of the industry a Report as early as possible, because we are apprised, quite as fully as the House, of the necessity of stating our policy at the earliest possible moment. With regard to this policy, I fully admit the necessity of it. During the War, conditions were altogether abnormal and exceptional, and the policy that was laid down two years ago is not applicable at the present moment in its entirety. What do I mean? We had the Corn Production Act. That Act guaranteed certain prices for cereals; it also set up an Agricultural Wages Board. Between the minimum wage proposed in
the Corn Production Act and the guaranteed price, which also occurred in that Act, there was a certain relation. The minimum wage mentioned in that Act was 25s. a week. The guaranteed price for wheat will come down, so far as the Act goes, to 45s. next year. It must be clear that if there was any definite relation, as I believe there was, between that minimum wage of 25s. and the guaranteed price for wheat of 45s., that relation is entirely upset when the minimum wage is raised far beyond the 25s. That is precisely what has happened. The minimum wage, on the average, at the present moment is not 25s., but the average throughout the country is 33s. An addition of 6s. 6d. is now to be made by the Wages Board, I think, almost within the next few days, and that brings up your average minimum wage to 39s. 6d. It is quite clear that if 45s. is regarded as a reasonable guaranteed price for next year and the years following when the minimum wage is 25s., it cannot be so regarded when the average minimum wage is 39s. 6d. Therefore, it is quite clear to us that there must be a modification of the policy.
I do not wish the House to think that I am in any way condemning the Wages Board for having put up the wages in the way they have, nor that I am in any way lacking in sympathy with the agricultural labourer in this increase in wages. The Agricultural Wages Board has been performing an exceedingly difficult task. I know the majority of its members have worked very hard and have performed their duty to the best of their ability, and I think the thanks of the community are due to them. Again, I am sure none of us were contented with the wages paid to the agricultural labourer before the War, and when you realise the great increase in prices that has occurred during the War it is literally and absolutely true that the increased wage paid now, though it may seem a great increase in money wages, is not any increase in real wages at all. I am sure there is not one of us, and I do not believe there is anybody interested in land, either as a landowner, or a tenant farmer or anything else, who does not desire to see the agricultural labourer well paid. In fact, one of the ideals on which I was brought up, and which occurs, I think, in one of Disraeli's books, was the great necessity for what he called a contented peasantry in this country. Therefore, I say that I am not
in any way blaming the Agricultural Wages Board, nor am I finding any fault with the increase of wages, but we come back to the point made by the hon. Member for Cirencester (Mr. Davies), that you must be sure that the industry can pay these wages. Because, if the industry cannot pay the wages, what is going to happen? Not merely will a great part, in fact probably all, of that land which has lately been ploughed up for food production purposes during the War—a fact which contributed, as I entirely agree, so much to our winning the War—go back to grass, and in many cases tumble back to grass, but a great deal of what was arable before will go out of cultivation. If you are going to have wages, and I think you ought to have good wages, over and beyond what the industry can afford, the only result will be that the industry will diminish and you will get a vast amount of unemployment in the country districts. Feeling that as we do, we see the necessity of having a careful inquiry into the whole economic situation, in order that we may be able to arrive at a decision as to where we are, and to take care that right and sufficient wages are paid and that the industry is in a position to pay them. The view I take is that the country is not going to let the agricultural industry down. It wants to know precisely where it stands with regard to the agricultural industry, and therefore this inquiry is made.
We have been criticised, sometimes very adversely criticised, by hon. Members in this House, and outside, because we have not produced a policy up to the present moment. With some of the attacks that have been made on the Board, and with all the attacks that have been made on the President, I am sure the House has no sympathy whatsoever. There have been statements made that I think are absolutely unjustifiable, because I am perfectly certain there never was a man who, under most difficult circumstances, has done more for the industry than the present President of the Board of Agriculture. He has had to guide the industry in a period of unparalleled difficulty, when calls were made upon it such as have never been made before. After all, is it fair to say there has been no policy? How do we stand as regards this present year? Cereal prices have been guaranteed, and guaranteed at a figure which is equal to the maximum
price which ruled last year. I do not know that the House or the country realises that that may cost the taxpayer a very large sum of money.

Captain WEDGWOOD BENN: How much?

Sir A. BOSCAWEN: That is a question that I cannot possibly answer, because it depends upon two considerations, as to neither of which have I any data to draw upon. One is, what are prices likely to fall to during the year? The other is, what is the acreage likely to be grown during the year? Until I know that—and nobody can possibly tell what those two figures are likely to be—it is impossible to say.

Captain BENN: Can the hon. Gentleman give any approximate estimate at all?

Sir A. BOSCAWEN: It might be nothing, if prices do not fall. On the other hand, if prices fall considerably, it might be a great deal. Then, again, we do not at the present moment know what the acreage may be. All I am saying is that so far from there being no policy with regard to this year, prices have been guaranteed, and they may involve—I do not go higher than that—a very considerable charge on the taxpayer.

Major HOWARD: Will the hon. Gentleman tell us how much these guaranteed prices are below the prices of foreign wheat?

Sir A. BOSCAWEN: I was coming to that in a moment. Therefore, as regards this year, if I may resume my argument, we have a policy. Where do we stand? As regards this year there is a policy, but I agree that a policy for one year is no use in the long run, and that we must have a policy for a term of years. In order that we may get a policy for a term of years we ask that this Commission may be appointed which will really give us the economic position, not having regard to profits which have been made under totally abnormal conditions during the War, but having regard to what is likely to happen in the near future. That is the point. It may be quite possible to prove that certain farmers during the last few years, with War prices, have made large profits, but those conditions are quite abnormal. What we want to know is what is likely to happen in the next few years, and what is necessary in the way of guaranteed prices to enable the industry
to succeed and to pay the wages we wish to see paid to the labourers. After all, the country owes a great deal to the farming industry. At great risk, in a great emergency, at the call of the Government, old pastures were broken up and risks were taken by farmers which had never been taken before. Having regard to that, it is right and proper that the country should see the agricultural interest through the difficult transition period between war conditions and peace conditions.
I have been saying a word in defence of the Board as against criticisms which have been made largely by members of the farming interest in the last few months. There were also attacks made upon the agricultural interest. I have read in various papers this sort of attack: "The farmer wants big guaranteed prices. He has had the guaranteed prices for the last few years, and he wishes to screw the last possible shilling out of the guarantee." The farmer has had no effective guaranteed prices. There have been the guaranteed prices of the Corn Production Act, but the prices have never come anywhere near them, and all the farmer has had has been maximum prices, which are not in any sense a guarantee to him, which are no help to the producer, but which, on the other hand, limit his profits. It is only right that the House and the country should know that the Wheat Commission has been buying abroad during the last few years sometimes at no less than 30s. a quarter more than the price allowed to the producer here. That is a very material consideration. All this points to the fact that we have not got the data at present on which to base an agricultural policy for the next few years. If we are to have a policy, and I agree entirely that we must have a policy, we have to get those data and to get them quickly. We have got to appoint some body of people who understand their job to get those data. We have to ask them to report at the earliest possible moment. When we have got that Report we shall know where we stand, and we do not know where we stand at present.

Captain TERRELL: When will the Committee be appointed?

Sir A. BOSCAWEN: I hope in the next, few days.

Sir R. NEWMAN: Who will preside over it?

Sir A. BOSCAWEN: I stated earlier that I was not in a position to give any names.

Sir R. NEWMAN: Will it be a judge of the High Court?

Sir A. BOSCAWEN: It may be. I cannot say more than that. My point is that the case for an inquiry, and a quick inquiry, is an overwhelming one, and for that reason the Government accepts the Motion and proposes to appoint a Commission with the least possible delay.

Mr. PRETYMAN: I congratulate my hon. Friend on the announcement he has just made, and on behalf of that part of the agricultural industry of which I have knowledge I think I can say they will unanimously welcome the decision of the Government to hold this inquiry. It is particularly necessary to hold an inquiry immediately, not only on the general grounds which have been stated in the Debate, but because there is at this moment a very serious crisis in the industry, and it is to that crisis that I wish to address my remarks. I was very glad indeed to hear my hon. Friend say there would probably be an Interim Report to enable the present position to be dealt with because, however complicated the Coal Inquiry may have been, everyone who knows anything about agriculture will realise that a really compendious inquiry into all agricultural conditions would be infinitely more difficult and complicated. There is no industry with such endless variety as agriculture. There is endless variety of soil. Even within these islands there is the greatest variety of climate. We have dry areas which suffer terribly from drought and we have other areas and soils which suffer terribly from wet. We have some of the best land in the world and we have some of the worst land in the world. We have land which grows grass better than cereals, and we have land which will grow cereals and will not grow grass. In fact, there is not a field in any part of the country which does not require special knowledge to farm it to the best advantage. To take another side, let me mention merely that of trying to arrive at a profit or a loss. It is absolutely impossible to state a definite figure of real profit or real loss in any given year for any farm or for any field on a farm. It is exactly the same problem as squaring the circle, literally and actually, because farming is an endless circle and a circle is an endless geometrical figure.
The farmer is carrying on a continuous process in a circle, every part of which fits into every part of it and which is never complete in any month of the twelve, and it is impossible at any moment to strike a balance showing the exact profit or loss for any farming operation upon any field upon any farm, except by making a valuation of what is left upon the land at the moment by the preceding crop or by the animal, and also a valuation of the value to the animal or to the succeeding crop of what has been put into the land. What the real figure of the value may be which is left in the land or taken out of it depends upon subsequent factors which no human being can possibly calculate. It is, therefore, impossible to arrive at a really accurate balance. The only balance in my opinion after thirty years of practical farming, which has any real value is the cash account at the beginning of the year and the cash account at the end of the year over a reasonable period of years and with some regard to the stock which is actually upon the farm. I only mention that to show the extraordinary complication and difficulty of what is the oldest and is by some regarded as the simplest industry in the world. It is really the most complicated and the most difficult and covers the widest ground, and if it were attempted by any Royal Commission to go into all the possibilities of farming and as to whether this or that method of farming is making the best of this or that particular class of land, it would never get to the end of it. The immediate problem we have to solve is, Can we so organise our agricultural industry that it can afford to pay as good a wage in proportion to the skilled worker as can be paid in other industries in this country? That is really the problem that has brought this matter forward to the House. There must be an answer, and I say that the answer to that question in the rough must precede any considerable change in the present wage. I congratulate my hon. Friend the Member for Cirencester (Mr. T. Davies) upon his very clear and able speech, with every word of which I agree, for I can confirm his views from my own knowledge of agricultural labourers. Apart from the general question, there is this fact, that in our rural districts a large number of railway workers live and who work at the local railway stations. These men are living under rural conditions, and are paying rural rents, and I do not think that anyone would venture
to say that the work they are doing is any more skilled or more responsible than the work that is being done by their neighbours who work on farms. Yet the railway worker has obtained a minimum wage of, approximately, 50s., and he is living alongside the agricultural labourer who has now a minimum wage of 30s. It is obvious that in ordinary fairness, as a question of justice between man and man, and with reference to the value of their work in the country, that the value of the agricultural labourer is at least equal to that of the railwayman, and there is no reason why the agricultural labourer should receive a less wage than the railwayman. That is the view of the labour unions, and everyone sympathises with, them and agrees that it is reasonable.
Let us take the matter one step further. How does the railwayman get his 50s.? Where does it come from? Does it come from the profits of the railways? We have only recently been informed in this House that the country is finding £110,000,000 to enable the railway companies to pay these minimum wages. What would have happened if the railway companies had been compelled by Statute to pay a 50s. minimum wage without a subsidy of £110,000,000? The railways would have been bankrupt. Those are obvious facts which no one can contradict. Now what is suggested? It is suggested that agriculture is to pay a minimum wage which is to approximate to 50s. and to rise afterwards to 50s. if possible. Where is the £110,000,000 to assist the agricultural industry to pay this wage? Is it suggested that it is worth the country's while to say that it is to the advantage of the agricultural labourer to bankrupt by Statute the industry by which he lives in order to enable him theoretically to obtain a minimum wage which his industry cannot pay, and which would merely result in his getting no wage at all? That position has created the crisis. You have on the one hand the agricultural labourer, and you have the labour unions in whose hands the labourer has placed himself. The agricultural labourer has not yet had sufficient experience of labour organisation to conduct his own case. I think it is a weak point in the present situation that this question is not being conducted by labourers with real knowledge of the agricultural situation but by leaders of unions who have a full knowledge of
labour conditions, and have every sympathy with the labourers, and look at the point from very sensible and reasonable points of view, but, as I have suggested, that is not the whole matter, but only part of it. I do not think they really understand how impossible it is, on a large proportion, of the poorer land of this country, that a higher wage should be paid and that the industry should continue to be carried on.
I speak with a full sense of responsibility, and I say that, in my opinion, there is a very large area in this country where under present conditions, and, so far as I can see the future prospects, unless very drastic steps are taken to help the farmers, they will be quite unable to pay even the proposed increase which is suggested in the increased flat rate of 6s. 6d. There are many farmers who can pay it. I can give my own experience. I have recently discussed this matter with farmers in two parts of England in which I have very intimate knowledge. In one of the districts the farmers told in that they thought they could pay the increased wage of 6s. 6d., but they found great difficulty and would find great difficulty on a good many of their farms with the reduced number of hours, particularly in the matter of the care of stock. That is a very difficult matter with them. In another district with which I am equally familiar, and which is a poor land district, the farmers are unanimously of opinion that it is impossible for them, under present conditions, to pay this increased wage. It will be very desirable that in those districts where the local wages board has not concurred in the proposed increase, that if that increase is to be enforced, it should be held in suspense until after we get the early interim Report of the Committee, and that if necessary it should be paid retrospectively from the date when any other general increase is given at a rate recommended after the real facts are known. I think that something of that kind should be done in order to meet the farmer's case. It is, in my opinion, unwise as well as unjust that this House, without a real knowledge of the facts which they hope to obtain from the Royal Commission, should say to the farmer that he must pay this increase, when after his record in the War he stands up to the country not in ones or in tens but in hundreds and in thousands, in poor land districts of this country, in the North, the South, the East and West, particularly
in the East and South, and says "I cannot afford under present conditions to pay this wage, and I ask that, at any rate, you should defer it until the whole facts are known and until you know that I am in a position to pay it, and if you find I am not in a position to pay it I look to you to put me in a position to pay, and I will willingly do so." That is the attitude of the farmer, and I do earnestly hope the House will consider that in a proper light. Of course this House has no control over the Wages Board, which is an independent judicial body, and will do as it likes, but I do suggest that the present position is very critical and very dangerous, and that if land is once left by the farmer and goes down, it will be a serious loss to the country and it will be almost impossible to recover the situation.
There is another point. It is quite clear that under the Corn Production Act under which the Wages Board was appointed, the procedure contemplated was that the local committee with full knowledge of the local conditions should originate proposals for changes of wage, and that these proposals for changes of wage should be adjudicated upon by the Central Wages Board. That process was followed last year, and as a result we have the variable minimum wage which is fitted to the conditions of the various districts. This year, the process has been reversed and instead of the local wages committee having made proposals for changes of wage to the Central Board, the Central Board has proposed a flat rate increase of 20 per cent. on the original minimum wage—6s. 6d. would be practically 20 per cent. increase on the existing minimum wage, and that has originated not with the local committees but with the Central Wages Board. It is not strictly illegal, but it is against the general intention and purpose of the Act. It creates a difficult situation in the poorer districts that this 6s. 6d. should be made a flat rate, and not subject to the same local considerations which affected the original minimum wage, which was varied to meet the local conditions. I would even limit the suggestion which I have made as to the action which the wages board ought to take to this, that where the proposed increase is assented to by the local committee there is no reason to delay it, but where the local committee has not assented to it, the increase, in so far as it is not assented to, ought to be deferred until the Royal Commission has reported whether that particular
district can or cannot pay, and then if it can be paid it should be retrospective. That would satisfy the farmer, that this House wishes to see justice done to him as well as the labourer.
It is not a case in agriculture, as in some other industries, of men receiving low wages from great employers with great resources, and large amounts of capital to enable them to tide over difficult times. A very large proportion of the farmers of this country have to live from hand to mouth almost as much as the agricultural labourer has had to do. They have to find the weekly wages bill, and they have to sell their produce to find it. In the interest of the industry and of ordinary fairness, and with due regard to the ability to pay of the different parts of the country, the small farmers particularly are just as much entitled to consideration, for they work quite as hard as, and sometimes a great deal harder than, the agricultural labourer for whom we all naturally feel and show so much sympathy. There is no class of the community, farmers or others, who, if they feel that they are not likely to receive fair treatment from this House, will not become despondent. The feeling of the farmers to-day is that this House and the Government are not treating them fairly, and the atmosphere in which they are living is not as favourable as it ought to be, in view of their war record. It is necessary to restore confidence. If confidence is taken away from the agricultural industry, it will be a very bad day for the country.
10.0 p.m.
We should be very careful in legislating for the agricultural industry as to the result of statutory interference with such complicated and difficult natural conditions as the agricultural industry has faced. After farming through all the bad times, personally, I doubt if I ever felt so anxious or sometimes so hopeless, even in the 'nineties, as I feel now, in view of the present agricultural situation. Many farmers feel the same. After all, there was something in what David said, that he would rather fall into the hands of the Almighty than into the hands of man. When you are facing natural difficulties, you feel that there may be some hope that natural conditions will change. They are things over which you have no control. It is up to you to stand up to them and meet them. But when instead of natural difficulties, you are met by hampering
legislation, then a man feels like a fish in a net, when he sees the only way in which he can make his business possible forbidden by Statute and that it is made criminal to do the only thing which he knows to be the right thing in the circumstances. That puts him in a much more hopeless position than he ever could be put by any natural difficulties he could encounter. The greatest drawback to all this legislation is its inelasticity. The great advantage of natural conditions is elasticity. Every man is free to do what is best in the natural conditions in which he finds himself. All legislation has to seek for uniformity, but you will never get progress by uniformity. Nature knows only one dead level—that is the bottom. All progress requires variety. This flat-rate legislation destroys variety, and it equally destroys all progress.
The only reasonable courses by which industry can prosper is that the minimum wage should be the wage at which the worst land which you require to see farmed at all can be farmed profitably. Let that be your statutory wage. There will be much land in many districts where a much higher wage can be paid. Let that be obtained by fair bargaining, as in other industries, between the employers' organisations and the workers' organisation. But by imposing a flat-rate wage, which will enable the average farmer just to pay his way, you are throwing absolutely out of cultivation all land below the average. That is what I mean by saying that uniformity is deadening. I feel deeply on this matter, because it touches me not in a theoretical but in a practical way. I go down to the country in the week-end. I have got to go into a field and settle what is to be done with it, and see how many men I can afford to employ on it. That problem has to be dealt with as a practical problem from week-end to week-end. At one turn or another I am met by legislation, passed with the best intentions by this House, which is absolutely destructive of all progress.
I hope that when this Royal Commission comes to that we may get these practical issues brought within the knowledge of the country. I agree with every word which my hon. Friend opposite and my hon. Friend below me have said as to the great advantage of publicity, as to the real difficulties of agriculture. Farmers have
nothing to fear and everything to gain by this inquiry. The farmers' difficulty in paying the wage is much less than the Government's difficulty in finding a policy. It is a matter of the most extraordinary difficulty. We are all agreed that the labourer ought to have as good a wage as the railway man—a 50s. minimum. Farmers all agree that if it is possible they will gladly pay the 50s. wage. Then we come to the next point. The Government have to make it possible. How are they going to do that? Is the country going to pay a higher price for its food? The country has got to answer that question. Is the country going to sanction subsidies to a very large extent? How is it going to be possible to graduate those subsidies on the different processes of the farm, and the different produce? The problem bristles with difficulties. The coal problem is one of simplicity compared with it. I do not envy the Government their task. If they can carry it out, and make it possible for the farmers to pay a wage which in those circumstances they are perfectly willing to pay, then the agricultural industry may know a peace, happiness and progress which it has not known for some years past, certainly does not possess in present conditions, and is not likely to possess in the future.

Mr. ACLAND: I resist with some, difficulty the temptation to dispute or disagree with the right hon. and gallant Member who has just sat down (Mr. Pretyman) in regard to the action of the Wages Board. I happen to be a member of the Wages Board, which, as he said, is luckily a tribunal not subject to Parliamentary authority and which can take its own way, and no doubt if the President of the Board thinks it will be useful for us he will send on to us the remarks and advice which have just been given with regard to the action that we ought to take. There really is a great deal to be said for having recommended, after a great deal of consideration of the arguments put forward by both sides, an increase in the varying rates of wages applicable to the different districts of the country, in order, in the first place, to compensate for the rise in the cost of living, and, in the second place, to give the labourer, what really in effect he has never effectively had before, a margin over and above the absolute cost of the bare necessities of life; and there is something to be said for regarding that increase as a flat rate, the figure ultimately
arrived at being 6s. 6d., to be added to the varying rates in existence in the different counties, rather than once more going through the process which we went through last year of receiving all sorts of varying recommendations, difficult to reconcile with one another, from the different counties as to what the increase should be to be given on account of the rather complicated position in which we found ourselves. I would like to come back to the subject of this Motion, which is a question of the Royal Commission, and there I quite agree, I think, with everything which has just been said, because a warning note was uttered by the last speaker in regard to what might be expected as the result of the Royal Commission. The Minister assented to the Motion, and said that a Commission will be appointed, which will be instructed to report quite soon, and which would really give us the economic position in regard to agriculture. I think the right hon. Member who preceded me uttered a very reasonable and right note of warning when he said you cannot arrive at the economic position, you cannot arrive at a balance-sheet with regard, say, to the cost of producing a quarter of wheat or a gallon of milk or something of that kind. There is, as he said very truly, all the difference in the world between agriculture and coal mining, and to think that you can in four, five, or six weeks' time get out as definite an answer to the problem, "What is the cost of growing a quarter of wheat?" as you can to the problem, "What is the average cost of producing a ton of coal in a particular coal field?" is really not a possibility. I am very doubtful, I am bound to say, as to the value which the public in general will attach to the findings of any Commission on agriculture which is instructed, I dare say with good reason, to report as quickly as it is desirable that this Commission should report. I do not believe four weeks or four months or really any time less than four years would be sufficient to give this country a proper, fair, considered, scientific answer to the question of what was the cost of carrying on ordinary farming operations, because, as has just been said, it depends on keeping accounts for the whole of the rotation and for more than the whole of the rotation and keeping accounts in an extraordinarily scientific manner, which it is very difficult to undertake on any farm, and which for practical purposes has been undertaken really on
very few farms, and even then there will be an enormous realm of doubt as to the interpretation of the figures.
I am very much afraid that the Government will appoint a Commission composed of persons all of them interested in one way or other in the agricultural industry, that the representatives of the other general outside consumers of agricultural produce will be almost of a necessity practically excluded, and that without being able to bring forward one scintilla of scientific evidence of any sort or kind they will arrive at some figure based on extremely inadequate investigation, that they will tell us they are agreed that the cost of production of a quarter of wheat or a gallon of milk is so-and-so, and that therefore the guaranteed price must be so-and-so if a new level of wages is to be paid with any reasonable chance of maintaining that reasonable rate of wage and any reasonable chance of profit to the farmer. I think that there will be a tendency to try to recommend such prices as will keep going in all respects the system of farming in this country as we have hitherto known it. In the long run the system of farming in this country has got to change very much indeed. If you compare our system with that which has been arrived at in countries where the question has been the result more of science and less of custom and of chance, I believe you will find this for certain, that here we have much too largo a proportion of our farms too large for a man to farm with his hands and too small for a man to farm with his head. That was the conclusion that Sir Thomas Middleton came to after comparing our agriculture with that of other countries. We have a very largely predominating proportion of our farms of, say, from 120 to 250 or 280 or 300 acres, farms on which one, two, or three workers are employed, too large for a man to work simply with his own family, too small for him to be able to apply the best that can be done in the shape of up-to-date labour-saving machinery, skilled mechanics, tractors, and so on, too small to be run really as scientific businesses. Undoubtedly sooner or later a good deal of that sort of farming is going to be made very difficult and squeezed out. The tendency is going to be to the smaller holdings and to the larger holdings, but the inevitable effect of the appointment of this Commission at this time will be that all that intermediate class of farming, which I think in the natural course of
events will in the next twenty or thirty years tend to give place either to smaller or larger holdings, will stake out its claim to have prices fixed at such a level as will preserve it with all those uneconomic tendencies and conditions of that particular part of the industry which have characterised it in the past. I think it would in a way be better that that tendency, which is sure to come in the long run, of making more smaller holdings on the one side and more larger holdings on the other, should be given something like free play, and that these really uneconomic sized holdings should not be, so to speak, boosted up with unnatural guaranteed prices as may be done—at any rate, there will be a very great effort to see that it is done by those who are put on this Commission.
There is another line which I think the Commission will be bound to take, and that is the argument that because agriculture is supposed to pay reasonable wages it therefore has a right to steady, permanent subventions from the taxpayer. That is a position which a small number of persons in this House, but a very, very large number of persons outside this House will by no means accept, and there will be no stability in that position, even if you do get it recommended by a Royal Commission and accepted by this House. Before the War it was an accepted commonplace of every political party that the agricultural labourer's wage was admitted to be a disgracefully sweated wage, and must be increased, and that some machinery must be introduced to increase that wage and no idea had entered into the minds of any political party that that involved guaranteed minimum prices or annual subventions from the taxpayers' pocket. I could quote Lord Lansdowne on this point, who said that it was essential that machinery should be established for increasing the labourers' wages, and in those days that was never linked up with guaranteeing minimum prices or subsidies to agriculture. I protested against that idea when the Corn Production Act was under consideration, and at other times, because I know that you will never get the public to recognise that because an industry is expected to pay what still remain the lowest standard wages of any of our standard trades there should be paid to it, year in and year out, sums out of the taxpayers' pocket, and it would be supposed that that industry ought to be
able to find its own level and pay reasonable wages out of the profits it earns without annual subventions from the taxpayer. In the long run the country might accept the basis of giving guaranteed prices, not by yoking together the Clauses in the Corn Production Act with guaranteed prices and the wages fixed by the Wages Board, but by the powers given under Part IV. which the hon. and gallant Member opposite never mentioned, and that has been left out entirely in the Debate.

Sir A. BOSCAWEN: We have no intention to drop that.

Mr. ACLAND: The hon. and gallant Member put it two or three times that because reasonable wages have got to be paid therefore agriculture requires subvention from the general taxpayer towards agricultural prices. I am glad to hear that Part IV. of the Corn Production Act is still present in hon. Members' minds, and that they recognise that there is a connection between the two things, and that the taxpayer may reasonably be called upon to guarantee certain prices for agricultural produce if he is going to be guaranteed a certain level of production and a certain standard of organisation.

Captain Sir B. STANIER: The Corn Production Bill does not guarantee the production. That is based on the average of the United Kingdom and that only.

Mr. ACLAND: When I talk of Part IV. I refer to the Clauses which give power to the Government to direct through the county executive committees exactly how each farm should be cultivated, and it is the perpetuation of that power through really strong county committees, and the certainty that each farm shall give a real quid pro quo in production, quality, organisation and the standardisation necessary, it is that sort of improvement of the produce of the land which the country may regard as a sufficient and proper return for guaranteeing minimum prices.
If it is put, as it has been put to-night, simply on the ground that agriculturists are entitled to certain prices because they pay certain wages, it is a very slippery slope. You may get this House of Commons to accept it, and you will get this generation of farmers to rejoice in what they can get out of it, but unless we set steadily to work, year by year and decade by decade, improving the production from the land, improving the organisation of
the products, improving the quality of the article produced, keeping up, for instance, the amount of arable land which would enable us in an emergency to be self-supporting, making possible, as I think will be essential in a few years' time, periodical surveys, estate by estate and village by village, examining not only into the products of the estate but also into the social organisation of the estate, so as to see to what extent a small man is given a chance of rising, so as to see that several farms are not all gathered together in the hands of some farmer or family, so as to see the allotments are not inconveniently situated, and so as to see that there is a decent piece of common land—unless you are going to organise your rural districts so as to give the greatest possible security to the country, the best possible sort of products from the country, and guarantee the best possible life on the land, I do not think that you can hope to get the doctrine of guaranteed prices accepted as anything but a temporary thing. I agree with all the speakers that the one thing which agriculture needs more than anything else is stability of conditions, and therefore I very much hope that the Government will not let their representatives drop into the idea of simply linking the question of wages with the question of guaranteed prices. I hope that they will look at the whole of the conditions of the agricultural industry from A to Z, and steadily press forward against bad landlords and bad farmers as an essential part of their policy, because I am certain that it is only so that they can have anything like permanent justification for the policy which they have set before them.

Mr. W. R. SMITH: It is not my intention to attempt to discuss this question in detail, not merely because we have been assured by the representative of the Government that they are prepared to concede the terms of the Motion, but because it must be obvious that it will be the business of the Commission to discuss the question in detail and to ascertain the facts. I rise because it might be thought, if nobody spoke from these benches, that we had no interest in the question. We most heartily welcome the idea of a Commission of Inquiry into agriculture. We would like that Inquiry to be as close and as careful as it is possible for it to be, and we are prepared to associate ourselves with it and to do our best to bring out clear and distinct all the facts that are essential for a
proper judgment to be given with regard to the agricultural industry of the country. We would not like the terms of reference to be too narrow. I do not know whether it is possible or wise to limit the terms of the Inquiry even for the purpose of an interim Report, because if you do you will get a result that will not be founded upon all the facts, but possibly upon only a portion of them. We want all the facts brought out in order that proper judgment may be exercised in regard to these matters. I am afraid the right hon. Member (Mr. Pretyman) was very pessimistic about the results of this Commission. I quite agree with him that agriculture does present a problem which differs from most other industries. But I do not believe it is a problem that cannot be overcome. The right hon. Gentleman rather commented on the fact that labour in connection with agriculture is not represented by people who have a first-hand practical knowledge of the industry. That is not entirely so. There are very few of the labour representatives on the Agricultural Wages Board who have not actually worked at the industry of agriculture, and some of them have never worked in connection with anything else. If it is true some of us who may occupy official positions have not been associated with the industry, I am afraid that our friends the farmers must accept some responsibility in that respect. If they had not resisted the efforts of the labourers years ago to join their union—if they had refrained from victimising their labourers because they did join—and it is not so many years ago I stood at the roadside with a man whose furniture had been turned out from his house for no other reason than that he had sought to become a member of his trade union—if the farmers put restrictions of that character in the way of labourers you must not be surprised that we have not diverted from their ranks the type of men who could best help them in the consideration of questions of wage and labour conditions.
I hope a new phase of things is arising where the same freedom and liberty of action will be accorded to the agricultural labourer as are enjoyed by other sections of the industrial world. I think, perhaps, this call for an inquiry comes at a very opportune moment. It is very largely because of the demand that has been put forward by the labourer for increased wages. It is quite true that the wage
which is being asked for—or rather the proposed wage issued by the Wages Board—has caused a great deal of alarm so far as the farmers are concerned. But I want to say most emphatically that the wages contained in that proposal do not represent in the mind of the labourer the wage he thinks he is entitled to. He looks upon it as something in the nature of an instalment of higher wages than is embodied in these figures, and if it is felt that this adjustment of wages does seriously prejudice the position of the industry then we have not the slightest hesitation in having the fullest inquiry in order that the facts may be ascertained so that we may know exactly where we are. It is interesting to note that the agitation that is going on at the present moment—which looks like seriously disturbing the industry—does not come from the workmen. It is the farmer who seems to be talking about a strike. I notice in some of the districts they are making an appeal for some sort of Napoleon to come and lead them in their resistance to the proposals that have been brought forward. If it is only to avoid anything of that description we would welcome this inquiry, because if our friends the farmers did seek by the methods of a strike to put their position forward, and, following the example of other strikers, sought to demonstrate, I am afraid that their appearance would not convey that depressed state of things which would convince the general public of their particular difficulties.
On behalf of those who sit on these benches I want to say that we have no desire to press forward points without there being an opportunity of ascertaining the facts in regard to the question with which we are dealing. We have sufficient confidence in the case that we seek to put forward to rely upon the facts which are ascertained by inquiry. I do not now discuss the question of whether the industry can afford to pay better wages, because that is not a question to be discussed by this House at the present moment. That must be a question for the Commission to consider; therefore, it is not worth while discussing it now. Because we are anxious to get a settlement of this question we are prepared to associate ourselves with this inquiry. We hope that the Government, will make its constitution as broad as it can be and will give Labour adequate representation, so
that its views may be expressed properly and adequately. We hope that as a result of the investigation we shall be able to lay down a policy which will give the labourer a condition of things which will enable him to remain on the land. We do not view with any feeling of gratification a condition of things which tempts the labourer to leave the land. It is the best type of labourer that goes, and we want that best type of labourer to remain. We do not want the industry to have the dregs, but rather the best of the labour market. It is only by having a free and open choice in that respect that the industry stands any reasonable chance of success. You cannot hope to retain the best labour on the land unless you make the conditions so attractive as to make the town less a temptation than it has been up to the present time. On behalf of the Labour section who may be called upon to deal with this matter, we shall be ready to help in the investigation in order to ascertain what are the facts in regard to the industry of agriculture.

Colonel Sir ROBERT WILLIAMS: The right hon. Gentleman the Member for Camborne (Mr. Acland) made a very excellent speech just now, but there was one phrase in it which vitiated a good deal of the remainder, and what he said will require the attention of the Government in setting up this Royal Commission. He talked of the production of food for the people. If the Royal Commission is going into that question, it must be very carefully selected. The idea seems to have got abroad that we are likely to be in this country entirely self-supporting. Is it thought that this country, with rarely ever more than 2 feet of soil above chalk, gravel or clay, with its variable climate and uncertain summer, can compete against the corn land of Canada with its6 or 8 feet of virgin soil, or with the soil of Buenos Aires, or with that of Australia If the country wants us to grow wheat, they must pay for it. I have an instance of my own, of a bit of down which, in 1866 or 1867, under the influence of the then high prices of corn, were ploughed up. It took the tenant and my father, and the tenant's son and myself, a good many years to get that land back again to pasturage. We had just succeeded when the War came, and I had to plough it up again and produce oats from it. What is the value of that field now? It is not good for another corn crop. If you are going to try and go against nature and
try to grow wheat for the nation under such conditions, then the nation must be prepared to pay for it, and that is one of the difficulties of the present situation. If you let farming alone as you let cotton manufacture or wool-spinning alone to develop on its own lines, and to make the best use it could of that which it has got it would be different. Here let me refer incidentally to the fact that we are in my district penalised in the price of our milk. We happen to be a little south of a district which has exactly the same soil and climate and yet we only get 1s. 4d. per gallon for our milk while the other district gets 1s. 6d., but that is a question of about which the Board of Agriculture will hear more. The right hon. Gentleman the Member for Camborne also mentioned this matter as Cornwall is in the same boat. That is an instance of the folly of trying to fix prices for agriculture on a false basis. I agree with a good deal of what was said by an hon. Member opposite, but I think the instance of the labourer having been turned out of his house because he joined a union must have been a great many years ago. Possibly it was twenty years ago [An Hon. Member: "No!"] or ten years. [An Hon Member: "Five years ago!"] It was a very wrong thing to do, but I think the newer generation of labourers are quite fit to hold their own—they are getting more educated.
Whether you will ever get the country village to attract the younger men and women, as against the cinemas and the lights of the town, I am very doubtful. In these days we find that amongst every class amusement is very much thought of, and much more than it used to be. It ranks a great deal higher in the minds of both men and women than was formerly the case, while the desire for education is not so great with the present generation. That desire may, however, come, and I hope under the new regulations of the Board of Education that it will come. The Board is taking steps to ensure that the children are longer at school, and that not quite so many subjects are crammed into them in two or three years, but that they have more time to develop some subjects which are calculated to be of use to them. At the present moment, with every class, amusement and a good time is what is most thought of, and it is not unnatural that after four years of the great War there should be some such spirit displayed; but I trust it will pass away. Meanwhile, that
spirit is there, and while it lasts you are not going to get the young men and women to settle down in the country. The village institutes are doing splendid work, and the village clubs are also doing good work in that direction, and in course of time you may be able to attract the best of the people back again. I am not sure that I agree with the right hon. Gentleman the Member for Camborne, that the small 200 or 250 acre farmer is going to be altogether squeezed out. On the contrary, I think that a man who finds enough work for himself and to employ two others has yet got a very large interest in rural economy, and if we can induce him to imbibe the ideas of co-operation, I think there is still a very great sphere for the smaller farmer. But it must be through co-operation, where three or more men in the same village can either hire or buy their own tractors and threshing machines. I look to co-operation to do a great deal of good.
I am afraid I have rather strayed away from the Royal Commission the Government have promised, but all these things are parts of the agricultural question, which do require to be taken in hand by the Commission, and it is by no means as simple a thing as the Coal Commission, because that deals with rather fixed conditions for a fixed population dealing with a fixed material. In the Agricultural Commission you have got very, very different material with which to deal, a different scheme, different soil, different conditions of tenure altogether; and, above all, the. Commission, or the Government and the nation, have got to make up their mind as to whether they want farming to develop itself on its own natural lines, as it ought to, or whether farming is going to be harnessed for the good of the rest of the country, and be obliged to proceed in ways which are not natural either to the soil or the climate, in order that we may provide ourselves with a surplus stock of wheat in case of another European war or other great emergency. The country must make up its mind first of all, because if the country wants us to provide our own corn, the country must pay for it, as I have no hesitation in saying—and no one knows it better than the hon. Gentleman representing the Board of Agriculture—that this is not a wheat-growing country. Scotland may grow oats, and we can grow barley, but we are not a wheat-growing country either by
climate or soil as against other countries, and therefore the first thing we have to do is to find out the mind of the country as to whether it wants the country to grow wheat and supply our own needs, because if it does, the country must pay for it. We do not want subvention for ordinary farming any more than cotton-spinning and wool-weaving want subvention, but if the country wants wheat it must pay for it.
You never can grow wheat in this country to pay the wages as such countries as India, the Argentine, and Canada. If, therefore, the country wants us to grow wheat we must have subvention; but if the country is content to let us do what we can, the country is perfectly able to do it without subvention, and with proper organisation and the future education, it is able to pay the high wages. But I go back a good many years, and I remember that the Royal Agricultural Society of England issued two balance-sheets of two farms—one in Norfolk and the other in Aberdeen. I forget the wages, but the wages bill in Norfolk was shared by twelve men, and that in Aberdeen by eight men. There is all the difference in that, and if our labourers are going to realise that the higher wages mean higher intelligence and more diligence in their work, well and good.
At the present moment it is not only the agricultural labourer, but almost every member of the working community, that thinks that higher wages mean less work, and less skilful work. But that is, I think, the effervescence of the War. It will pass. If our labourers will realise that if they get higher wages they will have to give better work it will be well, and I think we shall find it quite possible for the farmers themselves to employ fewer men. We have often men at low wages and low vitality, and no or little capacity. That is bad for the country and for the men themselves. If higher wages give us greater vitality and greater capacity; if a farmer, instead of employing twenty men at 15s. a week, employs a correspondingly less number at 30s. or 40s., agriculture will be the better, and the men will not be the losers. I end where I began. The country must make up its mind what it requires. If the country want the farmers to develop the land to its best capacity, leave them alone. Do not fix prices or anything else I think then we shall find that the farming community will prosper, that the labourers
will prosper, and that we shall do something to bring back agricultural and social life to what it used to be in the years gone by.

Mr. HURD: I was much interested to hear the speech made by one of the Labour Members opposite in which he said that in this matter we were entering upon a new phase. It was desirable that he should make that speech, but let us look upon the Order Paper and see what is the next Notice of Motion, which deals with food prices. It reads in this fashion:
Mr. George Thorne—Food prices—To call attention to the question of food prices; and to move, That, in the opinion of this House, the prevailing high cost and shortage of food is largely responsible for the existence of industrial unrest in the country; and that it is essential that the Food Controller should realise stocks of Food now available and make arrangements for an extended import in order to bring about an increase of supplies raid a substantial diminution of prices.
I think it must be quite obvious that if that, and that alone, represented the Labour attitude towards this great problem, there would be a great deal to seek, for there is a very obvious gap. If the whole question of food is not to be faced with a view also to production in this country, we are in a parlous position, and thrown back upon the perilous state of the country when the submarine brought us very near to starvation. It so happens that I come to this House from a number of crowded meetings of West Country farmers. They were angry farmers. I will tell the Parliamentary Secretary why. At the moment they are particularly vexed and full of unrest because of the sudden decision which has been come to affecting their livelihood. They ask themselves, What has been done in the way of inquiry as a prelude to that decision? When I go to the other place across the corridor I learn from the President of the Board of Agriculture that he has really nothing to say. He says it is a matter belonging to another Department, that is to say, that we have a Government decision, striking a deadly blow at smallholders, at the very moment when we are anxious to bring smallholders upon the land—a decision of the Government imperilling the supplies of milk from one of the great milk-producing areas in this country fit the very moment when Ministers get up here and say; Above all things, amongst the most necessary things, is a greater supply of good milk for the population.
The farmer asks himself how can it be that, having a Board of Agriculture, and having a Government pledged to the hilt to support agriculture as an essential industry in the country, this decision is come to, and the President of the Board of Agriculture is bound to tell us, not that he was not consulted exactly, but that at all events, seemingly, he had little or no weight in that decision. You cannot wonder at unrest in circumstances of that character. The right hon. Gentleman opposite, in the interesting speech which he has just made, told us that agriculture must find its own level. I would ask him whether throughout the War the farmer was any less conscious of his responsibilities than he was of the benefits that he might receive from legislation. I do not know any section of the community that showed during the War a greater sense of responsibility or a greater desire to live up to that responsibility.
As I say, I have just come from a part of the country where there is much unrest among the farmers. I was present at three great meetings of farmers, one at Taunton, one at Bristol, and one at Frome. These questions were discussed with some heat, but throughout the whole of those discussions I never heard one word of protest against the increased wage to the farm labourer. There was a feeling, however, that the Government, somehow or other, did not seem to take care to inform itself as to the real position before it came to decisions affecting the livelihood of every one of these men. One word of warning. We do not want the Commission dealing with agriculture to take its example from the Coal Commission, in regard, I do not say the scamped way, but the hurried way, in which it did its work. In my part of the country, where there are a large number of coal mines, evidence from the owners was shut out because they were told that the date of reporting was 20th March, and the Commission had not time to hear them. It would be perilous to the agricultural interests of this country, with its great variety of conditions, if we were to have a similar experience when the Agricultural Commission set to work. We should take warning from the Coal Commission also in this respect, that members of the Commission themselves should not come to the inquiry with their minds in favour of a certain conclusion.

Mr. ACLAND: Farmers are almost bound to.

Mr. HURD: We are not talking of farmers alone, but of those capable of serving on a Commission. They should do it with knowledge, but not with absolutely pre-conceived opinions as to conclusions they must come to. I am sure the Government, in forming this Commission, will bear that in mind, and that the Coal Commission will be a warning as to the peril of taking any other course. I do not say you can get an absolutely unbiassed Commission, but Commissioners who are thoroughly sympathetic to the conception with which the Coalition party fought the election under the leadership of the Prime Minister. That conception was that the maintenance and security of British agriculture was a great and essential cause, and that we could not hope for the future of this country unless home production was increased, and those who worked on the land did so with some security for their livelihood.

Captain BENN: Does the hon. Gentleman say that one of the planks of their programme in the election was protection for British agriculture?

Mr. HURD: I do not say anything of the sort, but I do most emphatically say that one of the planks of the programme on which the country voted so positively was this. British agriculture has been disgracefully neglected in the past. This country has suffered grave injury and almost the menace of starvation because of that neglect, and if the future of this country is to realise the hopes of its best friends and best citizens, agriculture must no longer suffer that neglect. I earnestly hope the farmers themselves will see the necessity of taking their share in this Commission. It will not do for the farming interest to be represented by witnesses who are not really representative of the industry. We have seen what has happened in the Coal Commission of witnesses coming forward who were not really able to inform the Commission on many vital points. I hope the farmers will in the selection of witnesses really try to get some departure from the sort of evidence we had at Exeter the other day on the vital milk question. It is hopeless to expect that you should have unanimity and, as a previous speaker has said, uniformity and inelasticity are deadly in a matter of this sort where you have such a vast variety of conditions to deal with. I strongly commend the Motion. Victor
Hugo said, "Let us have light in floods; bats cannot face the dawn." I earnestly hope the Commission will at all events bring us somewhere nearer the dawn in regard to the agricultural position.

Mr. SWAN: I am pleased that this question is likely to go to a Commission, and I hope the terms of reference will be as broad as possible. I am anxious that it should do so in order that the agricultural workers might have better consideration in the future than they have had in the past. I am not convinced that they have been paid the wages in the past, or are being paid the wages to-day, that the industry can afford. The cry that is put forward is the old cry of all employers, that the industry cannot pay the agricultural workers better wages. The same cry was put forward by the coal-owners, and that is why we got the Commission appointed. They said that they could not afford to pay the miners better wages, but the Commission proved absolutely that they could do so, and I am sure they can give the agricultural workers better conditions entirely than obtain today. No wonder the agricultural industry is in a bad state with the low wages and the long hours which the men have to work and the bad housing conditions. They are
overworked and underpaid and ill-housed. Much has been said in regard to the great work the farmers have done for the nation. I do not want to belittle the work they have done, but there is another section. There are the allotment holders who have played a great part in producing the nation's food and saving us from famine. I know land that has been taken over. It could not have fed a cuckoo before, but the workers succeeded with great difficulty and fought against the landowners and the farmers. It will be said the agricultural industry is going to ruin. There are a lot of men in this country who, given the chance to work the land, will make it very prolific and better than it is to-day. There is no other solution unless the land becomes nationalised. We believe the time has come when it ought to be taken over by the nation.

It being Eleven of the clock, the Debate stood adjourned.

The remaining Orders were read, and postponed.

Adjourned at One minute after Eleven o'clock.